In January 2011, the United States was still in the grips of the Great Recession. The unemployment rate sat at a stubborn 9 percent, slightly lower than the high of 10 percent in October 2009. Job losses were staggering. The Chicago and Phoenix metro areas shed 330,000 and 240,000 jobs, respectively, from their pre-recession peak to their post-recession troughs in 2010. Even mid-sized Portland, Ore. had lost 80,000 jobs by late 2009.

Amid this urgency, we made a big bet, launching the Brookings-Rockefeller Project on State and Metropolitan Innovation (PSMI) in early 2011. The vision was to accelerate the U.S. transition into the next economy by helping cities and metro areas emerge from the recession with more jobs and better jobs but also with economies that were more opportunity-rich and globally competitive. The interest was swift. Governors and mayors—some newly elected—were eager to launch job strategies. Regional chambers of commerce and economic development organizations were scrambling to update old economic plans to reflect post-recession realities. Over nearly five years, PSMI has engaged 29 metropolitan areas and states in reorienting their strategies and investments toward innovation, entrepreneurship, trade, skills development, and other drivers of long-term sustainable growth.

This month, we published a new report commissioned from Regional Growth Strategies that gives us a window into how well that experiment has worked, drawing from a sample of the sites most intensely involved in PSMI, and what we and our partners have learned about the challenges of transforming regional and state economies.

The findings are both promising and sobering.

To be clear, we knew the goal was ambitious. No region or state could overhaul their market fundamentals or effectively tackle the big structural changes in the economy overnight. Plus, the promise of better jobs, expanding household incomes, and steadily improving living standards would take time to gain traction and yield results.

But a tangible shift is underway. Public and private sector leaders in cities and states are adopting a new generation of economic development strategies that reflect the needs of the future economy, while staying true to unique local assets and the potential of local workers. The state of Nevada and the Phoenix metro area, two places long synonymous with growth driven by tourism and housing construction, are undertaking comprehensive strategies around industry clusters, new technologies, and the development of a STEM workforce to diversify and strengthen their economy for the long-run. Syracuse/Central Upstate New York launched a global trade strategy, an expanded effort to train lower-skilled workers for better jobs, and an innovation initiative focused on the emergence of a new cross-sector technology cluster around data and remote sensing technology. Portland and San Diego spearheaded regional export strategies that deepen their specializations in green-building, life sciences, and other industries, attracting customers and venture capital from across the world. Memphis, which has long struggled with educational and racial disparities, is launching an ambitious workforce intermediary that is connecting the K-12 public education system, community colleges, and key industry partners to expand opportunities for firms and workers. And New York state created a national model for state economic development anchored in regional strategies by introducing a competition designed to incentivize and support strategic regional action.

The report also describes other civic innovations—the invention of new strategies, such as in exports and trade; the consensus toward systemic change with a “portfolio of mutually reinforcing initiatives” versus isolated rifle-shot solutions; and new multi-jurisdictional partnerships that are replacing wasteful intraregional rivalries. These exciting efforts are being rewarded with the rise of stronger backbone organizations and new intermediaries to support implementation.

But the report is also rather blunt about the challenges facing local and state leaders that could hamper further progress. These include the complexity of managing long-term collective impact when local players change and new priorities emerge. Leaders are also struggling to secure long-term funding to sustain and scale their efforts and deliver bigger results. Meanwhile, these transformative strategies operate even as incentive-driven economic development still abounds. “Business attraction is so hard-wired,” as one local leader observed, that traditional short-term approaches still dwarf the difficult efforts of this new tack.

The report’s author, Pete Carlson, will expand on the report’s lessons in a series of blogs over the next several months. Findings from the project will also be explored in more detail in a summative evaluation of the entire PSMI that will be completed later this year. We publish these findings and lessons in hopes that it informs and encourages the evolution underway in the field toward a more sustainable, resilient economy.

For Brookings, as we reflect on these lessons, we intend for this experiment to give way to a change in our business model. We intend to make it our objective to provide data, research, and a platform for state and metro leaders to continue to learn and succeed from national experts and, even more importantly, from one another. We will continue to partner with forward-looking regions and institutions to tackle the persistent challenge of greater opportunity for all.

Authors

In January 2011, the United States was still in the grips of the Great Recession. The unemployment rate sat at a stubborn 9 percent, slightly lower than the high of 10 percent in October 2009. Job losses were staggering. The Chicago and Phoenix metro areas shed 330,000 and 240,000 jobs, respectively, from their pre-recession peak to their post-recession troughs in 2010. Even mid-sized Portland, Ore. had lost 80,000 jobs by late 2009.

Amid this urgency, we made a big bet, launching the Brookings-Rockefeller Project on State and Metropolitan Innovation (PSMI) in early 2011. The vision was to accelerate the U.S. transition into the next economy by helping cities and metro areas emerge from the recession with more jobs and better jobs but also with economies that were more opportunity-rich and globally competitive. The interest was swift. Governors and mayors—some newly elected—were eager to launch job strategies. Regional chambers of commerce and economic development organizations were scrambling to update old economic plans to reflect post-recession realities. Over nearly five years, PSMI has engaged 29 metropolitan areas and states in reorienting their strategies and investments toward innovation, entrepreneurship, trade, skills development, and other drivers of long-term sustainable growth.

This month, we published a new report commissioned from Regional Growth Strategies that gives us a window into how well that experiment has worked, drawing from a sample of the sites most intensely involved in PSMI, and what we and our partners have learned about the challenges of transforming regional and state economies.

The findings are both promising and sobering.

To be clear, we knew the goal was ambitious. No region or state could overhaul their market fundamentals or effectively tackle the big structural changes in the economy overnight. Plus, the promise of better jobs, expanding household incomes, and steadily improving living standards would take time to gain traction and yield results.

But a tangible shift is underway. Public and private sector leaders in cities and states are adopting a new generation of economic development strategies that reflect the needs of the future economy, while staying true to unique local assets and the potential of local workers. The state of Nevada and the Phoenix metro area, two places long synonymous with growth driven by tourism and housing construction, are undertaking comprehensive strategies around industry clusters, new technologies, and the development of a STEM workforce to diversify and strengthen their economy for the long-run. Syracuse/Central Upstate New York launched a global trade strategy, an expanded effort to train lower-skilled workers for better jobs, and an innovation initiative focused on the emergence of a new cross-sector technology cluster around data and remote sensing technology. Portland and San Diego spearheaded regional export strategies that deepen their specializations in green-building, life sciences, and other industries, attracting customers and venture capital from across the world. Memphis, which has long struggled with educational and racial disparities, is launching an ambitious workforce intermediary that is connecting the K-12 public education system, community colleges, and key industry partners to expand opportunities for firms and workers. And New York state created a national model for state economic development anchored in regional strategies by introducing a competition designed to incentivize and support strategic regional action.

The report also describes other civic innovations—the invention of new strategies, such as in exports and trade; the consensus toward systemic change with a “portfolio of mutually reinforcing initiatives” versus isolated rifle-shot solutions; and new multi-jurisdictional partnerships that are replacing wasteful intraregional rivalries. These exciting efforts are being rewarded with the rise of stronger backbone organizations and new intermediaries to support implementation.

But the report is also rather blunt about the challenges facing local and state leaders that could hamper further progress. These include the complexity of managing long-term collective impact when local players change and new priorities emerge. Leaders are also struggling to secure long-term funding to sustain and scale their efforts and deliver bigger results. Meanwhile, these transformative strategies operate even as incentive-driven economic development still abounds. “Business attraction is so hard-wired,” as one local leader observed, that traditional short-term approaches still dwarf the difficult efforts of this new tack.

The report’s author, Pete Carlson, will expand on the report’s lessons in a series of blogs over the next several months. Findings from the project will also be explored in more detail in a summative evaluation of the entire PSMI that will be completed later this year. We publish these findings and lessons in hopes that it informs and encourages the evolution underway in the field toward a more sustainable, resilient economy.

For Brookings, as we reflect on these lessons, we intend for this experiment to give way to a change in our business model. We intend to make it our objective to provide data, research, and a platform for state and metro leaders to continue to learn and succeed from national experts and, even more importantly, from one another. We will continue to partner with forward-looking regions and institutions to tackle the persistent challenge of greater opportunity for all.

Authors

]]>
http://www.brookings.edu/research/reports/2015/07/23-expanding-growth-opportunity-carlson?rssid=state+metro+innovation{CB6441F3-7B27-46B0-ACEE-E3F88E5FCB68}http://webfeeds.brookings.edu/~/102958476/0/brookingsrss/projects/statemetroinnovation~Expanding-Growth-and-Opportunity-Findings-from-the-BrookingsRockefeller-Project-on-State-and-Metropolitan-InnovationExpanding Growth and Opportunity: Findings from the Brookings-Rockefeller Project on State and Metropolitan Innovation

In 2011, Brookings and the Rockefeller Foundation launched the Project on State and Metropolitan Innovation (PSMI), a five-year initiative to expand economic growth and opportunity in metropolitan regions. Over the last four years, the project has worked with 22 metropolitan regions and seven states to create and deploy economic development strategies designed to grow and retain high-quality jobs in innovative, productive industries in ways that expand opportunity for all.

At the regional level, Brookings has organized cross-sector partnerships of leaders to rigorously assess the unique assets and dynamics of their economies and develop strategies to leverage those assets to drive sustainable growth and expanded opportunity. At the state level, Brookings has worked with governors and state officials to rethink and revamp economic development policies. In addition, Brookings has communicated the urgency, rationale, and emerging outcomes of those strategies to spur others to adopt this new approach.

As part of its commitment to learning, Brookings funded ongoing monitoring of five regions and one state involved in the PSMI, including Louisville-Lexington, Minneapolis-St. Paul, Northeast Ohio, Portland, and Upstate New York (Syracuse), and the state of Nevada.

Last December, Brookings convened leaders from these sites for a daylong conversation assessing the PSMI work overall, its impact thus far, and lessons for future work. A similar session engaged Brookings staff and leaders in a debriefing of the full portfolio of PSMI projects. In preparation for this report, additional interviews also were conducted with 13 leaders in those sites and four others, including Chicago, Memphis, Phoenix, and Puget Sound.

The findings from those assessments and interviews show that the PSMI has been an effective catalyst in changing thinking and practice related to economic development. The project has strengthened, deepened, and expanded efforts in participating sites to develop and deploy new approaches for expanding economic growth and opportunity.

The Brookings frameworks and analyses developed through the PSMI have provided focus and direction to those efforts, driving new insights and uncovering new opportunities for growth and development. And partnerships created or strengthened in the course of the project have built collaborative capacity at the metro and state levels to carry out and sustain this critically important work, in some cases bringing together public- and private-sector leaders who had never before worked together or focused on regional issues.

The work has not always proceeded smoothly, as regional organizations undertaking the PSMI work took on greater responsibility, reinvented their roles in the regions, managed layers of collaboration, and implemented far-reaching strategies to bring about the change envisioned. In some cases and in some sites, implementation has proceeded with stops and starts or required a change in course to overcome barriers. In other cases, initiatives put forward in the original strategies never gained traction or were surpassed by other priorities. Yet, where obstacles have arisen, leaders have devised new approaches or revamped the plans and moved forward on implementation of the new model.

In addition, work carried out as part of the PSMI is exerting important ripple effects within the regions that go beyond the direct intervention made under the project. Other organizations in participating regions are incorporating the model and agenda into their own work. And relationships developed through the PSMI efforts are being leveraged to generate new initiatives and build new capacity as work proceeds across multiple fronts.

Given that the focus of the PSMI is on long-term transformation of systems, its full impact will not begin to emerge for several years, as the theory of change predicts. However, the PSMI has laid important groundwork and shaped ongoing efforts to expand growth and opportunity, and sites are building momentum in this direction.

That momentum bodes well for the long-term adoption of the model, although several issues will present challenges to regional leaders as they work to sustain and expand these efforts. It is another positive outcome of the efforts so far that these issues have been identified and can be anticipated and addressed going forward. Some of the key considerations identified:

Leaders need to be able to work across programmatic and jurisdictional boundaries to implement the new model, both strategically and organizationally, but such “galvanizing” leaders are in short supply.

The work is long term and systemic, but funding is short term and programmatic, requiring regional leaders to cobble together programmatic grants on a long-term basis.

Dedicated staff is essential to the core team guiding the work, but sites are challenged to secure sustained funding for “backbone” organizations or intermediaries.

Systems change requires a holistic approach, but moving on too many fronts can overwhelm the effort. Focusing on single projects is more feasible but reduces the potential for broader impact and transformation of systems.

Entrenched interests and systems resist change, and many public resources are constrained by established programs.

A natural process of entropy arises from inevitable changes in leadership, the economic and political landscape, and priorities in organizations and funders, increasing the challenge of sustaining long-term efforts.

Lessons such as these, learned over the four years of the Project on State and Metropolitan Innovation, have refined and sharpened the strategy, even as the work continues to unfold. These lessons are also laying the groundwork for a next generation of research into the forces and conditions that drive healthy economic growth in metros and how best to leverage them. Brookings knows now more clearly where it can add the most value—and how it can join with metro and state partners to drive the creation of more equitable and inclusive growth.

Downloads

Authors

In 2011, Brookings and the Rockefeller Foundation launched the Project on State and Metropolitan Innovation (PSMI), a five-year initiative to expand economic growth and opportunity in metropolitan regions. Over the last four years, the project has worked with 22 metropolitan regions and seven states to create and deploy economic development strategies designed to grow and retain high-quality jobs in innovative, productive industries in ways that expand opportunity for all.

At the regional level, Brookings has organized cross-sector partnerships of leaders to rigorously assess the unique assets and dynamics of their economies and develop strategies to leverage those assets to drive sustainable growth and expanded opportunity. At the state level, Brookings has worked with governors and state officials to rethink and revamp economic development policies. In addition, Brookings has communicated the urgency, rationale, and emerging outcomes of those strategies to spur others to adopt this new approach.

As part of its commitment to learning, Brookings funded ongoing monitoring of five regions and one state involved in the PSMI, including Louisville-Lexington, Minneapolis-St. Paul, Northeast Ohio, Portland, and Upstate New York (Syracuse), and the state of Nevada.

Last December, Brookings convened leaders from these sites for a daylong conversation assessing the PSMI work overall, its impact thus far, and lessons for future work. A similar session engaged Brookings staff and leaders in a debriefing of the full portfolio of PSMI projects. In preparation for this report, additional interviews also were conducted with 13 leaders in those sites and four others, including Chicago, Memphis, Phoenix, and Puget Sound.

The findings from those assessments and interviews show that the PSMI has been an effective catalyst in changing thinking and practice related to economic development. The project has strengthened, deepened, and expanded efforts in participating sites to develop and deploy new approaches for expanding economic growth and opportunity.

The Brookings frameworks and analyses developed through the PSMI have provided focus and direction to those efforts, driving new insights and uncovering new opportunities for growth and development. And partnerships created or strengthened in the course of the project have built collaborative capacity at the metro and state levels to carry out and sustain this critically important work, in some cases bringing together public- and private-sector leaders who had never before worked together or focused on regional issues.

The work has not always proceeded smoothly, as regional organizations undertaking the PSMI work took on greater responsibility, reinvented their roles in the regions, managed layers of collaboration, and implemented far-reaching strategies to bring about the change envisioned. In some cases and in some sites, implementation has proceeded with stops and starts or required a change in course to overcome barriers. In other cases, initiatives put forward in the original strategies never gained traction or were surpassed by other priorities. Yet, where obstacles have arisen, leaders have devised new approaches or revamped the plans and moved forward on implementation of the new model.

In addition, work carried out as part of the PSMI is exerting important ripple effects within the regions that go beyond the direct intervention made under the project. Other organizations in participating regions are incorporating the model and agenda into their own work. And relationships developed through the PSMI efforts are being leveraged to generate new initiatives and build new capacity as work proceeds across multiple fronts.

Given that the focus of the PSMI is on long-term transformation of systems, its full impact will not begin to emerge for several years, as the theory of change predicts. However, the PSMI has laid important groundwork and shaped ongoing efforts to expand growth and opportunity, and sites are building momentum in this direction.

That momentum bodes well for the long-term adoption of the model, although several issues will present challenges to regional leaders as they work to sustain and expand these efforts. It is another positive outcome of the efforts so far that these issues have been identified and can be anticipated and addressed going forward. Some of the key considerations identified:

Leaders need to be able to work across programmatic and jurisdictional boundaries to implement the new model, both strategically and organizationally, but such “galvanizing” leaders are in short supply.

The work is long term and systemic, but funding is short term and programmatic, requiring regional leaders to cobble together programmatic grants on a long-term basis.

Dedicated staff is essential to the core team guiding the work, but sites are challenged to secure sustained funding for “backbone” organizations or intermediaries.

Systems change requires a holistic approach, but moving on too many fronts can overwhelm the effort. Focusing on single projects is more feasible but reduces the potential for broader impact and transformation of systems.

Entrenched interests and systems resist change, and many public resources are constrained by established programs.

A natural process of entropy arises from inevitable changes in leadership, the economic and political landscape, and priorities in organizations and funders, increasing the challenge of sustaining long-term efforts.

Lessons such as these, learned over the four years of the Project on State and Metropolitan Innovation, have refined and sharpened the strategy, even as the work continues to unfold. These lessons are also laying the groundwork for a next generation of research into the forces and conditions that drive healthy economic growth in metros and how best to leverage them. Brookings knows now more clearly where it can add the most value—and how it can join with metro and state partners to drive the creation of more equitable and inclusive growth.

Downloads

Authors

]]>
http://www.brookings.edu/blogs/the-avenue/posts/2015/01/12-states-small-mid-sized-firms-exporters-lee-suominen?rssid=state+metro+innovation{06229C0F-36E3-44DA-A4D0-8D1686804F6D}http://webfeeds.brookings.edu/~/83164551/0/brookingsrss/projects/statemetroinnovation~How-States-Can-Help-Small-and-MidSized-Firms-Become-ExportersHow States Can Help Small- and Mid-Sized Firms Become Exporters

Out of all the companies in the United States, only 4 percent are exporters.

This statistic is surprising given the outsized role that exports played in helping the United States recover from the Great Recession. During the initial recovery period, nearly 40 percent of U.S. GDP growth came from exports.

Today, almost 80 percent of global purchasing power resides outside the United States. Rising global demand—especially in emerging markets, with their expanding middle-class consumer bases—has heightened U.S. firms’ interest in exporting.

Becoming an exporter requires investments of time and money. International marketing and sales, order fulfillment and distribution, and trade compliance all add up. Harder still can be securing longer-term loans and equity finance to fuel a company’s international growth. For small- and medium-sized enterprises (SMEs)—those employing fewer than 500 workers—the cost of entering new markets poses a sizable challenge. Without access to capital, many of these smaller firms forego lucrative export opportunities that would enable them to grow and create jobs in the United States.

SMEs typically have a harder time securing export financing than large firms do. Their smaller size and limited assets, along with elevated loan processing costs, make banks less interested in working with them. Meanwhile, most SMEs are unaware of the export financing programs offered by the Export-Import Bank, the Small Business Administration, and other institutions.

There is an opportunity for state governments to take steps to improve SMEs’ access to export financing. By incorporating export support into their broader economic development strategies, states can increase the number of exporters, which in turn will boost job creation and strengthen their metropolitan areas’ economies.

First, states can work to raise awareness among SMEs and financial institutions about existing federal and private instruments and sources of export financing. This action will encourage greater numbers of firms and banks to take advantage of proven solutions to the export finance challenge.

Second, states can offer additional financial instruments to help reduce SMEs’ barriers to exporting. Direct loans and loan guarantees, royalty-based financing, and accounts receivable financing, among other interventions, make it easier for potential SME exporters to expand into new markets. And in addition to banks, states can work with a broader set of actors—such as with factoring companies and equity funds—to meet SME’s diverse export finance needs.

Third, states can set up new finance entities that provide direct export finance support exclusively targeted to SMEs. A state-level export-import bank—perhaps akin to the California Export Finance Office (CEFO), which offered a variety of guarantees for smaller export-related loans from its inception in 1985 until 2003, when state budget problems forced its closure— could be able to offer flexible, tailored solutions to the challenges facing these smaller firms.

State-level efforts are no replacement for federal programs like the Export-Import Bank, which plays a critical role in helping U.S. companies compete in the global marketplace. But state strategies can provide a much needed supplement to federal export finance programs by bridging the gaps in the current system. By implementing innovation solutions to the challenges facing potential and current SME exporters, states can help SMEs expand into new markets and bolster economic growth in the process.

Authors

Out of all the companies in the United States, only 4 percent are exporters.

This statistic is surprising given the outsized role that exports played in helping the United States recover from the Great Recession. During the initial recovery period, nearly 40 percent of U.S. GDP growth came from exports.

Today, almost 80 percent of global purchasing power resides outside the United States. Rising global demand—especially in emerging markets, with their expanding middle-class consumer bases—has heightened U.S. firms’ interest in exporting.

Becoming an exporter requires investments of time and money. International marketing and sales, order fulfillment and distribution, and trade compliance all add up. Harder still can be securing longer-term loans and equity finance to fuel a company’s international growth. For small- and medium-sized enterprises (SMEs)—those employing fewer than 500 workers—the cost of entering new markets poses a sizable challenge. Without access to capital, many of these smaller firms forego lucrative export opportunities that would enable them to grow and create jobs in the United States.

SMEs typically have a harder time securing export financing than large firms do. Their smaller size and limited assets, along with elevated loan processing costs, make banks less interested in working with them. Meanwhile, most SMEs are unaware of the export financing programs offered by the Export-Import Bank, the Small Business Administration, and other institutions.

There is an opportunity for state governments to take steps to improve SMEs’ access to export financing. By incorporating export support into their broader economic development strategies, states can increase the number of exporters, which in turn will boost job creation and strengthen their metropolitan areas’ economies.

First, states can work to raise awareness among SMEs and financial institutions about existing federal and private instruments and sources of export financing. This action will encourage greater numbers of firms and banks to take advantage of proven solutions to the export finance challenge.

Second, states can offer additional financial instruments to help reduce SMEs’ barriers to exporting. Direct loans and loan guarantees, royalty-based financing, and accounts receivable financing, among other interventions, make it easier for potential SME exporters to expand into new markets. And in addition to banks, states can work with a broader set of actors—such as with factoring companies and equity funds—to meet SME’s diverse export finance needs.

Third, states can set up new finance entities that provide direct export finance support exclusively targeted to SMEs. A state-level export-import bank—perhaps akin to the California Export Finance Office (CEFO), which offered a variety of guarantees for smaller export-related loans from its inception in 1985 until 2003, when state budget problems forced its closure— could be able to offer flexible, tailored solutions to the challenges facing these smaller firms.

State-level efforts are no replacement for federal programs like the Export-Import Bank, which plays a critical role in helping U.S. companies compete in the global marketplace. But state strategies can provide a much needed supplement to federal export finance programs by bridging the gaps in the current system. By implementing innovation solutions to the challenges facing potential and current SME exporters, states can help SMEs expand into new markets and bolster economic growth in the process.

Fostering increased levels of exports continues to be an important component of states’ economic development strategies. Exports helped bring the United States out of the Great Recession, with particularly rapid growth in certain states and metropolitan areas.

Despite these recent gains, many companies remain reluctant to enter into foreign markets. This is especially true of small and medium-sized enterprises (SMEs), which have long been content to conduct business exclusively within the United States. However, as emerging markets expand and demand for U.S. products and services grows, SMEs would be remiss in continuing to avoid exporting.

Unfortunately, access to capital remains a sizable obstacle for SMEs looking to become exporters. Although the federal government has worked to address export finance challenges, these interventions have proven imperfect solutions, particularly given the growing uncertainty surrounding the future of such efforts. Meanwhile, several other critical challenges have yet to be resolved, including a lack of awareness about existing export finance programs, financial instruments that are poorly designed for SME needs, and the private-sector financing gaps faced by SMEs.

Given these challenges, states interested in bolstering exports have an important role to play in improving SME access to export financing. This brief argues that states can draw on three complementary approaches to address the SME export financing shortfall:

Raise awareness among SMEs and financial institutions regarding the various instruments and sources of export financing that are currently available

Downloads

Authors

Kati Suominen

Jessica A. Lee

]]>
Thu, 08 Jan 2015 00:00:00 -0500Kati Suominen and Jessica A. Lee

Fostering increased levels of exports continues to be an important component of states’ economic development strategies. Exports helped bring the United States out of the Great Recession, with particularly rapid growth in certain states and metropolitan areas.

Despite these recent gains, many companies remain reluctant to enter into foreign markets. This is especially true of small and medium-sized enterprises (SMEs), which have long been content to conduct business exclusively within the United States. However, as emerging markets expand and demand for U.S. products and services grows, SMEs would be remiss in continuing to avoid exporting.

Unfortunately, access to capital remains a sizable obstacle for SMEs looking to become exporters. Although the federal government has worked to address export finance challenges, these interventions have proven imperfect solutions, particularly given the growing uncertainty surrounding the future of such efforts. Meanwhile, several other critical challenges have yet to be resolved, including a lack of awareness about existing export finance programs, financial instruments that are poorly designed for SME needs, and the private-sector financing gaps faced by SMEs.

Given these challenges, states interested in bolstering exports have an important role to play in improving SME access to export financing. This brief argues that states can draw on three complementary approaches to address the SME export financing shortfall:

Raise awareness among SMEs and financial institutions regarding the various instruments and sources of export financing that are currently available

Downloads

Authors

Kati Suominen

Jessica A. Lee

]]>
http://www.brookings.edu/research/reports/2014/06/13-prosperity-at-a-crossroads-kansas-city?rssid=state+metro+innovation{1F68EA65-7F37-4799-98C6-D3223DA7E3C9}http://webfeeds.brookings.edu/~/66369013/0/brookingsrss/projects/statemetroinnovation~Prosperity-at-a-Crossroads-Targeting-Drivers-of-Economic-Growth-for-Greater-Kansas-CityProsperity at a Crossroads: Targeting Drivers of Economic Growth for Greater Kansas City

The Greater Kansas City region has a number of enviable assets: a high quality of life; good jobs in industries as diverse as vehicle manufacturing and financial services; and a predictable and reliable economy for attracting businesses and talent. But these assets can no longer be taken for granted. New analysis on the performance of the Greater Kansas City economy provides evidence that the region is becoming less competitive, weakening its ability to create jobs and sustain higher standards of living.

It is time to take stock of Greater Kansas City’s economic strengths, weaknesses and opportunities.

This report finds that:

I. Greater Kansas City, like other U.S. metropolitan areas, is confronting global and political forces that require renewed attention on the core drivers of economic growth and prosperity. To prosper in the face of increasing global competition, new disruptive technologies, and changing demographics, the region must embrace trade, innovation, and talent — the fundamental drivers of growth and opportunity – or risk falling behind.

2. While Greater Kansas City’s economy has held steady, there are troubling indicators in the region’s productivity and competitiveness. The region’s productivity advantage, a historically distinctive competitive edge, has declined relative to the nation. This coincides with a shrinking of the region’s market share of U.S. jobs and output, indicating a weakening in overall competitiveness.

3. Greater Kansas City exhibits strengths in the key drivers of growth and productivity, but the region’s economic engine is not fueling high performance. First, Greater Kansas City specializes in a diverse set of traded sectors, but nearly all are losing market share in jobs and output compared to their peers nationally. Second, Greater Kansas City has a high concentration of high-tech startups and strong patent growth, but these capabilities have not translated into commercial applications among a wide group of firms or led to the creation of enough new firms. Finally, the region has a well-educated workforce, but does not produce enough educated or STEM-qualified workers to keep pace with employer demand.

4. Greater Kansas City’s leaders now face an important opportunity to more strategically bolster its drivers of economic growth so that the region can compete and prosper, generating lasting opportunity for all.Greater Kansas City can organize for success by coming together around a unified economic agenda, focusing on market fundamentals, and engaging a broad group of stakeholders around data-driven decision-making.

This report aims to arm the region’s leaders and citizens with information and analysis to spark an important community-wide conversation about the choices to be made to position the region for continued prosperity.

The Greater Kansas City region has a number of enviable assets: a high quality of life; good jobs in industries as diverse as vehicle manufacturing and financial services; and a predictable and reliable economy for attracting businesses and talent. But these assets can no longer be taken for granted. New analysis on the performance of the Greater Kansas City economy provides evidence that the region is becoming less competitive, weakening its ability to create jobs and sustain higher standards of living.

It is time to take stock of Greater Kansas City’s economic strengths, weaknesses and opportunities.

This report finds that:

I. Greater Kansas City, like other U.S. metropolitan areas, is confronting global and political forces that require renewed attention on the core drivers of economic growth and prosperity. To prosper in the face of increasing global competition, new disruptive technologies, and changing demographics, the region must embrace trade, innovation, and talent — the fundamental drivers of growth and opportunity – or risk falling behind.

2. While Greater Kansas City’s economy has held steady, there are troubling indicators in the region’s productivity and competitiveness. The region’s productivity advantage, a historically distinctive competitive edge, has declined relative to the nation. This coincides with a shrinking of the region’s market share of U.S. jobs and output, indicating a weakening in overall competitiveness.

3. Greater Kansas City exhibits strengths in the key drivers of growth and productivity, but the region’s economic engine is not fueling high performance. First, Greater Kansas City specializes in a diverse set of traded sectors, but nearly all are losing market share in jobs and output compared to their peers nationally. Second, Greater Kansas City has a high concentration of high-tech startups and strong patent growth, but these capabilities have not translated into commercial applications among a wide group of firms or led to the creation of enough new firms. Finally, the region has a well-educated workforce, but does not produce enough educated or STEM-qualified workers to keep pace with employer demand.

4. Greater Kansas City’s leaders now face an important opportunity to more strategically bolster its drivers of economic growth so that the region can compete and prosper, generating lasting opportunity for all.Greater Kansas City can organize for success by coming together around a unified economic agenda, focusing on market fundamentals, and engaging a broad group of stakeholders around data-driven decision-making.

This report aims to arm the region’s leaders and citizens with information and analysis to spark an important community-wide conversation about the choices to be made to position the region for continued prosperity.

Downloads

Authors

]]>
http://www.brookings.edu/research/reports/2014/04/16-clean-energy-through-bond-market?rssid=state+metro+innovation{324159B8-94B1-486A-ACFA-7A85C63AB77B}http://webfeeds.brookings.edu/~/65486322/0/brookingsrss/projects/statemetroinnovation~Clean-Energy-Finance-Through-the-Bond-Market-A-New-Option-for-ProgressClean Energy Finance Through the Bond Market: A New Option for Progress

State and local bond finance represents a powerful but underutilized tool for future clean energy investment.

For 100 years, the nation’s state and local infrastructure finance agencies have issued trillions of dollars’ worth of public finance bonds to fund the construction of the nation’s roads, bridges, hospitals, and other infrastructure—and literally built America. Now, as clean energy subsidies from Washington dwindle, these agencies are increasingly willing to finance clean energy projects, if only the clean energy community will embrace them.

So far, these authorities are only experimenting. However, the bond finance community has accumulated significant experience in getting to scale and knows how to raise large amounts for important purposes by selling bonds to Wall Street. The challenge is therefore to create new models for clean energy bond finance in states and regions, and so to establish a new clean energy asset class that can easily be traded in capital markets. To that end, this brief argues that state and local bonding authorities and other partners should do the following:

Establish mutually useful partnerships between development finance experts and clean energy officials at the state and local government levels

Expand and scale up bond-financed clean energy projects using credit enhancement and other emerging tools to mitigate risk and through demonstration projects

Improve the availability of data and develop standardized documentation so that the risks and rewards of clean energy investments can be better understood

Create a pipeline of rated and private placement deals, in effect a new clean energy asset class, to meet the demand by institutional investors for fixed-income clean energy securities

State and local bond finance represents a powerful but underutilized tool for future clean energy investment.

For 100 years, the nation’s state and local infrastructure finance agencies have issued trillions of dollars’ worth of public finance bonds to fund the construction of the nation’s roads, bridges, hospitals, and other infrastructure—and literally built America. Now, as clean energy subsidies from Washington dwindle, these agencies are increasingly willing to finance clean energy projects, if only the clean energy community will embrace them.

So far, these authorities are only experimenting. However, the bond finance community has accumulated significant experience in getting to scale and knows how to raise large amounts for important purposes by selling bonds to Wall Street. The challenge is therefore to create new models for clean energy bond finance in states and regions, and so to establish a new clean energy asset class that can easily be traded in capital markets. To that end, this brief argues that state and local bonding authorities and other partners should do the following:

Establish mutually useful partnerships between development finance experts and clean energy officials at the state and local government levels

Expand and scale up bond-financed clean energy projects using credit enhancement and other emerging tools to mitigate risk and through demonstration projects

Improve the availability of data and develop standardized documentation so that the risks and rewards of clean energy investments can be better understood

Create a pipeline of rated and private placement deals, in effect a new clean energy asset class, to meet the demand by institutional investors for fixed-income clean energy securities

With Washington adrift and the United Nations climate change panel again calling for action, the search for new clean energy finance solutions continues.

Against this backdrop, the Metro Program has worked with state- and city-oriented partners to highlight such responses as repurposing portions of states’ clean energy funds and creating state green banks. Likewise, the Center for American Progress just recently highlighted the potential of securitization and investment yield vehicles, called yield cos. And last week an impressive consortium of financiers, state agencies, and philanthropies announced the creation of the Warehouse for Energy Efficiency Loans (WHEEL) aimed at bringing low-cost capital to loan programs for residential energy efficiency. WHEEL is the country’s first true secondary market for home energy loans—and a very big deal.

Over 100 years, the nation’s state and local infrastructure finance agencies have issued trillions of dollars’ worth of public finance bonds to fund the construction of the nation’s roads, bridges, hospitals, and other infrastructure—and literally built America. Now, as clean energy subsidies from Washington dwindle, these agencies are increasingly willing to finance clean energy projects, if only the clean energy community will embrace them.

So far, these authorities are only experimenting. However, the bond finance community has accumulated significant experience in getting to scale and knows how to raise large sums for important purposes by selling bonds to Wall Street. Accordingly, the clean energy community—working at the state and regional level—should leverage that expertise. The challenge is for the clean energy and bond finance communities to work collaboratively to create new models for clean energy bond finance in states, and so to establish a new clean energy asset class that can easily be traded in capital markets.

Along these lines, our new brief argues that state and local bonding authorities, clean energy leaders, and other partners should do the following:

Establish mutually useful partnerships between development finance experts and clean energy officials at the state and local government levels

Expand and scale up bond-financed clean energy projects using credit enhancement and other emerging tools to mitigate risk and through demonstration projects

Improve availability of data and develop standardized documentation so that the risks and rewards of clean energy investments can be better understood

Create a pipeline of rated and private placement deals, in effect a new clean energy asset class, to meet the demand by institutional investors for fixed-income clean energy securities

And it’s happening. Already, bonding has been embraced in smart ways in New York; Hawaii; Morris County, NJ; and Toledo, among other locations featured in our paper. Now, it’s time for states and municipalities to increase the use of bonds for clean energy purposes. If they can do that it will be yet another instance of the nation’s states, metro areas, and private sector stepping up with a major breakthrough at a moment of federal inaction.

Authors

With Washington adrift and the United Nations climate change panel again calling for action, the search for new clean energy finance solutions continues.

Against this backdrop, the Metro Program has worked with state- and city-oriented partners to highlight such responses as repurposing portions of states’ clean energy funds and creating state green banks. Likewise, the Center for American Progress just recently highlighted the potential of securitization and investment yield vehicles, called yield cos. And last week an impressive consortium of financiers, state agencies, and philanthropies announced the creation of the Warehouse for Energy Efficiency Loans (WHEEL) aimed at bringing low-cost capital to loan programs for residential energy efficiency. WHEEL is the country’s first true secondary market for home energy loans—and a very big deal.

Over 100 years, the nation’s state and local infrastructure finance agencies have issued trillions of dollars’ worth of public finance bonds to fund the construction of the nation’s roads, bridges, hospitals, and other infrastructure—and literally built America. Now, as clean energy subsidies from Washington dwindle, these agencies are increasingly willing to finance clean energy projects, if only the clean energy community will embrace them.

So far, these authorities are only experimenting. However, the bond finance community has accumulated significant experience in getting to scale and knows how to raise large sums for important purposes by selling bonds to Wall Street. Accordingly, the clean energy community—working at the state and regional level—should leverage that expertise. The challenge is for the clean energy and bond finance communities to work collaboratively to create new models for clean energy bond finance in states, and so to establish a new clean energy asset class that can easily be traded in capital markets.

Along these lines, our new brief argues that state and local bonding authorities, clean energy leaders, and other partners should do the following:

Establish mutually useful partnerships between development finance experts and clean energy officials at the state and local government levels

Expand and scale up bond-financed clean energy projects using credit enhancement and other emerging tools to mitigate risk and through demonstration projects

Improve availability of data and develop standardized documentation so that the risks and rewards of clean energy investments can be better understood

Create a pipeline of rated and private placement deals, in effect a new clean energy asset class, to meet the demand by institutional investors for fixed-income clean energy securities

And it’s happening. Already, bonding has been embraced in smart ways in New York; Hawaii; Morris County, NJ; and Toledo, among other locations featured in our paper. Now, it’s time for states and municipalities to increase the use of bonds for clean energy purposes. If they can do that it will be yet another instance of the nation’s states, metro areas, and private sector stepping up with a major breakthrough at a moment of federal inaction.

Authors

]]>
http://www.brookings.edu/research/reports/2013/02/colorado-advanced-industries?rssid=state+metro+innovation{CC0EF1FA-9934-4623-BF0E-6D809966A30B}http://webfeeds.brookings.edu/~/65486327/0/brookingsrss/projects/statemetroinnovation~Launch-Taking-Colorado%e2%80%99s-Space-Economy-to-the-Next-LevelLaunch! Taking Colorado’s Space Economy to the Next Level

Part of Brookings's new Advanced Industries Series, this report finds that the Colorado space economy is a critical driver of economic growth and explores how Colorado can defend and extend its current position as one of the most multidimensional space economies in the nation. Directly employing over 66,000 workers across the military, civil, and private domains, the full space enterprise in Colorado contributed some $8.7 billion in value-added output in 2011, in a performance that generated some 3.8 percent of Colorado’s private-sector gross domestic product.

Note: This report was released at an event on Tuesday, February 5, at the History Colorado Center. The Metropolitan Policy Program at Brookings presented a dynamic public forum focused on the significance and future of the Colorado space economy as an exemplary advanced industry. The forum explores ways the Colorado space cluster can build and sustain regional and national economic competitiveness. See event details.

With the Great Recession receding but disruptive change in the air, Colorado has been moving to reassess its economic positioning and identify the most promising sources of long-term growth and competitiveness.

Most notably, the administration of Gov. John Hickenlooper—alert to calls that the United States must reorient its drifting economy away from consumption activities and imports and more toward high-value innovation, production, and exports—has been carrying out a major economic planning initiative aimed at engaging the state’s key industries and regions in a “bottom-up” effort to explore and seize on the best opportunities for economic expansion. Through this Colorado Blueprint process, the state has come to focus—with support from the Brookings Institution Metropolitan Policy Program—on its extraordinary space/aerospace cluster, which it quickly recognized stands as a classic “advanced industry.”

Three major findings about the Colorado space economy:

Colorado possesses one of the most diversified, multidimensional, and high-potential space economies in the nation.

However, while significant opportunities are emerging, a set of disruptive forces at work in the global space market have exposed a number of competitive challenges for the Colorado industry.

Given these challenges as well as its many strengths, Colorado should commit itself to preeminence in the space through a collaborative partnership of industry and government along six dimensions.

Authors

Part of Brookings's new Advanced Industries Series, this report finds that the Colorado space economy is a critical driver of economic growth and explores how Colorado can defend and extend its current position as one of the most multidimensional space economies in the nation. Directly employing over 66,000 workers across the military, civil, and private domains, the full space enterprise in Colorado contributed some $8.7 billion in value-added output in 2011, in a performance that generated some 3.8 percent of Colorado’s private-sector gross domestic product.

Note: This report was released at an event on Tuesday, February 5, at the History Colorado Center. The Metropolitan Policy Program at Brookings presented a dynamic public forum focused on the significance and future of the Colorado space economy as an exemplary advanced industry. The forum explores ways the Colorado space cluster can build and sustain regional and national economic competitiveness. See event details.

With the Great Recession receding but disruptive change in the air, Colorado has been moving to reassess its economic positioning and identify the most promising sources of long-term growth and competitiveness.

Most notably, the administration of Gov. John Hickenlooper—alert to calls that the United States must reorient its drifting economy away from consumption activities and imports and more toward high-value innovation, production, and exports—has been carrying out a major economic planning initiative aimed at engaging the state’s key industries and regions in a “bottom-up” effort to explore and seize on the best opportunities for economic expansion. Through this Colorado Blueprint process, the state has come to focus—with support from the Brookings Institution Metropolitan Policy Program—on its extraordinary space/aerospace cluster, which it quickly recognized stands as a classic “advanced industry.”

Three major findings about the Colorado space economy:

Colorado possesses one of the most diversified, multidimensional, and high-potential space economies in the nation.

However, while significant opportunities are emerging, a set of disruptive forces at work in the global space market have exposed a number of competitive challenges for the Colorado industry.

Given these challenges as well as its many strengths, Colorado should commit itself to preeminence in the space through a collaborative partnership of industry and government along six dimensions.

Downloads

Authors

]]>
http://www.brookings.edu/research/opinions/2013/01/23-manufacturing-innovation-growth-katz-muro?rssid=state+metro+innovation{4B57CFEE-2C14-4235-B7A4-9D284E7A2D1B}http://webfeeds.brookings.edu/~/65486329/0/brookingsrss/projects/statemetroinnovation~Washington-Must-Focus-on-GrowthWashington Must Focus on Growth

Editor's Note: Bruce Katz and Mark Muro call on the federal government to strengthen the manufacturing sector by suggesting low-cost initiatives to bolster U.S. economic competitiveness. Katz and Muro highlight recent recommendations to create a ‘"Race to the Shop Competition," designate "U.S. Manufacturing Universities," and authorize a national network for 25 advanced industries innovation hubs. Read the full article at cnn.com.

"Reviving America’s advanced industries is a critical component of building a more productive, sustainable, and inclusive economy. U.S. manufacturing, for instance, provides an important source of quality jobs that pay, on average, nearly 20 percent higher weekly earnings than non-manufacturing jobs, and are more likely to provide employee benefits."

Debt and deficits have dominated our nation’s capital for the last two years. From the near government shutdown over a budget impasse in April 2011 to the debt ceiling crisis and subsequent credit downgrade in August 2011 to the recent brinksmanship to avert a fiscal cliff, it has been “all deficits all the time.

And yet, amidst the fiscal obsession, a slow-moving economic emergency persists. The U.S. faces an overall “jobs deficit” of 11 million to make up the jobs we lost during the Great Recession and account for a wave of new entrants to the labor force. The number of poor and near poor in America skyrocketed from 81 million in 2000 to 107 million in 2011, nearly one-third of the U.S. population.

Given these trends, it is not enough for the federal government to simply get its fiscal house in order. Rather, it’s time for both sides to put aside deep ideological differences and work together to jumpstart economic growth.

Where should they begin? An obvious first step is to invest in growing the productive and innovative “advanced industry” sectors of our economy, such as advanced manufacturing.

Authors

Editor's Note: Bruce Katz and Mark Muro call on the federal government to strengthen the manufacturing sector by suggesting low-cost initiatives to bolster U.S. economic competitiveness. Katz and Muro highlight recent recommendations to create a ‘"Race to the Shop Competition," designate "U.S. Manufacturing Universities," and authorize a national network for 25 advanced industries innovation hubs. Read the full article at cnn.com.

"Reviving America’s advanced industries is a critical component of building a more productive, sustainable, and inclusive economy. U.S. manufacturing, for instance, provides an important source of quality jobs that pay, on average, nearly 20 percent higher weekly earnings than non-manufacturing jobs, and are more likely to provide employee benefits."

Debt and deficits have dominated our nation’s capital for the last two years. From the near government shutdown over a budget impasse in April 2011 to the debt ceiling crisis and subsequent credit downgrade in August 2011 to the recent brinksmanship to avert a fiscal cliff, it has been “all deficits all the time.

And yet, amidst the fiscal obsession, a slow-moving economic emergency persists. The U.S. faces an overall “jobs deficit” of 11 million to make up the jobs we lost during the Great Recession and account for a wave of new entrants to the labor force. The number of poor and near poor in America skyrocketed from 81 million in 2000 to 107 million in 2011, nearly one-third of the U.S. population.

Given these trends, it is not enough for the federal government to simply get its fiscal house in order. Rather, it’s time for both sides to put aside deep ideological differences and work together to jumpstart economic growth.

Where should they begin? An obvious first step is to invest in growing the productive and innovative “advanced industry” sectors of our economy, such as advanced manufacturing.

Editor's note: Judith Rodin and Bruce Katz discuss key points in a newly released interactive report, "Innovations to Watch." Rodin and Katz highlight state and metropolitan governments that encourage economic growth, productivity, sustainability, and global reach through innovative initiatives. Read the full article at cnn.com.

With its past-midnight resolution (at least temporarily) of the fiscal cliff, Washington gave us a clearer picture of what the next two to four years of federal action might look like: Lengthy periods of legislative gridlock, persistent partisan finger-pointing and short bursts of incremental activity that ultimately fail to resolve the major national challenges at hand.

And those challenges are substantial. Our country is still struggling to fully recover from the Great Recession. More than 12 million Americans are still out of work, and 107 million Americans are considered poor or near poor (up from 81 million a decade ago). The United States ranks 16th in the world in infrastructure quality, with one in four bridges in America considered structurally deficient. And our education system is no longer keeping our kids competitive, leaving 15-year-old American students ranked 31st in math and 23rd in science.

But as has happened time and again throughout American history, our greatest innovations come at times of greatest challenge. True to form, inaction from the federal government has sparked the innovation of states, cities and metropolitan areas that are teeming with smart, pragmatic bipartisan solutions to national economic challenges.

Authors

Editor's note: Judith Rodin and Bruce Katz discuss key points in a newly released interactive report, "Innovations to Watch." Rodin and Katz highlight state and metropolitan governments that encourage economic growth, productivity, sustainability, and global reach through innovative initiatives. Read the full article at cnn.com.

With its past-midnight resolution (at least temporarily) of the fiscal cliff, Washington gave us a clearer picture of what the next two to four years of federal action might look like: Lengthy periods of legislative gridlock, persistent partisan finger-pointing and short bursts of incremental activity that ultimately fail to resolve the major national challenges at hand.

And those challenges are substantial. Our country is still struggling to fully recover from the Great Recession. More than 12 million Americans are still out of work, and 107 million Americans are considered poor or near poor (up from 81 million a decade ago). The United States ranks 16th in the world in infrastructure quality, with one in four bridges in America considered structurally deficient. And our education system is no longer keeping our kids competitive, leaving 15-year-old American students ranked 31st in math and 23rd in science.

But as has happened time and again throughout American history, our greatest innovations come at times of greatest challenge. True to form, inaction from the federal government has sparked the innovation of states, cities and metropolitan areas that are teeming with smart, pragmatic bipartisan solutions to national economic challenges.

Last year, the Brookings Metropolitan Policy Program identified 10 “State and Metropolitan Innovations to Watch.” These represent our assessment of the most promising new practices undertaken by states and metropolitan areas across five key areas—exports, low carbon, innovation, opportunity and governance—that seem ripe for meaningful impact as well as for replication by other communities. With the release of our 2013 list of Innovations to Watch, we checked in with the 2012 selections to find impressive progress, and in some cases initial signs of innovative ideas being implemented in other states and metros.

Exports

METRO

In March 2012, the Los Angeles Regional Export Council (LARExC) launched its Regional Export Plan. The plan identified target industries for export promotion efforts, established a marketing strategy to increase the global profile of the region and firms expanding sales abroad and identified new performance metrics to gauge the success of implementation. In addition, LARExC began operating as a full-fledged organization: The council received funding for operations from the Port of Los Angeles and JPMorgan Chase; led international trade missions to Chile (focused on medical equipment), Japan (focused on consumer products), and Hong Kong (focused on textiles and fashion); conducted 15 trade seminars focused on small and medium sized businesses; and recruited six firms to its export champions program.

STATE

Michigan - Clearing Hurdles for the New International Trade Crossing

The New International Trade Crossing, a major proposed bridge linking Detroit and Windsor, Ont., was the highlight of our 2012 focus of Michigan Governor Rick Snyder’s infrastructure plans for the state. Despite continued opposition from the operator of the existing cross-border Ambassador Bridge, plans for the new bridge continued in the last year, with the Canadian government officially agreeing to fully finance the $1 billion project in June. Michigan voters also rejected a ballot initiative in November crafted to stop the project, which would have required another round of voter approval for international crossings from the state. The next step is approval from the Obama administration, pursuant to the International Bridge Act of 1972.

Low Carbon

METRO

San Diego – Smarter San Diego: Expanding Access to Electric Vehicles

The deployment of electric vehicle technology in San Diego took exciting steps in 2012. The California Energy Commission awarded UC San Diego, in partnership with two charging manufacturers, a $340,000 grant to build world-leading campus EV infrastructure. In addition, the city of San Diego brought to scale the nation’s first all-electric car-sharing service through Daimler subsidiary car2go, quickly accumulating more than 12,500 members who have taken more than 200,000 trips using the service.

STATE

Connecticut – Green Bank Deployment and Replication

The Connecticut Clean Energy Finance and Investment Authority (CEFIA) has both begun to make and facilitate clean energy and energy efficiency investments, and emerged as a model for other states. In 2012, CEFIA invested in new projects including solar PV deployment, energy efficient installations on the state’s college campuses, and a 15 MW fuel cell power plant in Bridgeport, CT, one of the largest in the world. In June, Connecticut Governor Dannel Malloy signed legislation enabling CEFIA to manage a new commercial property-assessed clean energy (PACE) program, enabling property owners to take out low-interest loans for energy-efficiency upgrades or onsite renewable energy via CEFIA-backed PACE bonds, paid back with energy cost savings. This month, New York Governor Andrew Cuomo announced a similar $1 billion “green bank,” and states like Hawaii, Montana, Rhode Island and California are considering similar initiatives.

Innovation

METRO

The Manhattan Community Board approved Cornell’s land use plan for the flagship Applied Sciences NYC campus on Roosevelt Island. This January Cornell welcomes students to its initial “beta class” for a one-year master’s of engineering program temporarily housed in Google’s New York City headquarters. In addition, New York City announced two new Applied Sciences NYC campuses within the city. A consortium led by New York University is establishing a Center for Urban and Science Progress (CUSP) in Brooklyn, and Columbia University is creating a new Institute for Data Science on the University’s main campus in Morningside Heights.

STATE

Tennessee – Launching Regional Startup Ecosystems

Tennessee’s entrepreneurship and innovation efforts expanded in 2012 with the creation of LaunchTN, a new five-year public-private partnership overseeing all of the state’s entrepreneurship and innovation programs—including the regionally-focused INCITE Co-Investment Fund, highlighted among last year’s Innovations to Watch. Over the last year, Tennessee’s nine regional business accelerators, under guidance from LaunchTN, provided support to nearly 100 early-stage companies, which together raised over $17 million in private capital and created over 200 jobs. The INCITE fund also invested $7.1 million in Tennessee-based companies, matched by $18.6 million in private investment. These investments, paired with a focus on tech transfer and commercialization, has driven a dramatic increase in startups spun out of state research institutions—up 70 percent in the last year and 200 percent in the past two years. To ensure these efforts are sustained, LaunchTN named a board of directors that includes some of the state’s leading entrepreneurs and investors as well as representatives from some of the state’s leading research institutions and companies including Vanderbilt University, Oak Ridge National Lab, Eastman Chemical Company, FedEx, and Smith & Nephew.

Opportunity

METRO

Seattle, WA – A Race to the Top Road Map

The Road Map Project in Greater Seattle got a substantial endorsement and support in 2012 in the form of a federal Race to the Top grant. A consortium of the seven school districts involved, which cover 261 schools serving 150,000 students, were awarded $40 million over four years—the largest grant awarded—to support the project’s integrated and personalized cradle-to-college approach, with funding for early learning, STEM education, and college preparation.

STATE

North Carolina – Progress on Pathways to Success

For the North Carolina Community College System (NCCCS)’s comprehensive statewide community college initiative SuccessNC, 2011 was a year of identifying strategies, and 2012 was the first full year of implementation and execution. So in the last year, a number of SuccessNC’s comprehensive statewide strategies have seen significant developments, from new pilots to fully implemented programs. The “Career and College Promise,” for example, (which was implemented in 2012) is a partnership with the North Carolina Department of Public Instruction and University of North Carolina System, which offers dual-enrollment between high schools and community colleges with a pathway to UNC college credit, a credential, certificate or diploma in a technical career, or a high school diploma and two years of college credit in just four to five years. And SuccessNC’s “Code Green Super Curriculum Improvement Project,” (which is being piloted now and will be rolled out beginning in fall 2013) streamlines technical education in core skills to be better aligned with industry-recognized credentials and integrates the fast-growing, cross-industry topics of clean technology and energy efficiency.

Governance

METRO

Northeast Ohio– Magnet: Attracting New Partners

Northeast Ohio’s Partnership for Regional Innovation Services to Manufacterers (PRISM), launched by the region’s business planning initiative, has expanded its reach in 2012. The Manufacturing Advocacy and Growth Network (Magnet), which manages PRISM, announced a partnership in October with four universities—Cleveland State University, Case Western Reserve, Lorain County Community College, and the University of Akron. Magnet will now be able to connect small and medium sized manufacturers in the region with faculty, students, facilities and equipment in the specific areas of specialty for each institution (e.g. polymers at the University of Akron), to facilitate research and product development. The partnership is part of Magnet’s aggressive growth strategy: it has worked with 12 firms to date who project the collaboration will lead to $275 million in new revenue and 450 new jobs by 2014, and hopes to reach more than 100 firms by 2017.

STATE

New York – Regional Economic Development Goes Two Rounds

New York State’s bottom-up regional economic development planning competition, featured in our 2012 Innovations to Watch for state governance, saw the beginning of implementation of the first round of regional plans as well as a new round of awards in the a last year. Each of the “best plan” regions saw significant progress in developing their plans: Western New York, centered around Buffalo, for example, completed the “site control” phase in construction of its new Industrial Trade Center; North Country secured $30 million in Industrial Revenue Bonds to fund a new biomass electric facility; Central New York supported construction of the CNY Biotech Accelerator, scheduled for completion in 2013; and the Long Island’s publically-supported research collaborative launched a public-private emerging technologies commercialization fund. And throughout the state, the councils have become central to coordinating any economic development initiatives. In December, Governor Andrew Cuomo announced $738 million for the second round of regional council funding, with the Finger Lakes, Mid-Hudson, and Southern Tier regions winning this year’s “best plan” awards.

Authors

Last year, the Brookings Metropolitan Policy Program identified 10 “State and Metropolitan Innovations to Watch.” These represent our assessment of the most promising new practices undertaken by states and metropolitan areas across five key areas—exports, low carbon, innovation, opportunity and governance—that seem ripe for meaningful impact as well as for replication by other communities. With the release of our 2013 list of Innovations to Watch, we checked in with the 2012 selections to find impressive progress, and in some cases initial signs of innovative ideas being implemented in other states and metros.

Exports

METRO

In March 2012, the Los Angeles Regional Export Council (LARExC) launched its Regional Export Plan. The plan identified target industries for export promotion efforts, established a marketing strategy to increase the global profile of the region and firms expanding sales abroad and identified new performance metrics to gauge the success of implementation. In addition, LARExC began operating as a full-fledged organization: The council received funding for operations from the Port of Los Angeles and JPMorgan Chase; led international trade missions to Chile (focused on medical equipment), Japan (focused on consumer products), and Hong Kong (focused on textiles and fashion); conducted 15 trade seminars focused on small and medium sized businesses; and recruited six firms to its export champions program.

STATE

Michigan - Clearing Hurdles for the New International Trade Crossing

The New International Trade Crossing, a major proposed bridge linking Detroit and Windsor, Ont., was the highlight of our 2012 focus of Michigan Governor Rick Snyder’s infrastructure plans for the state. Despite continued opposition from the operator of the existing cross-border Ambassador Bridge, plans for the new bridge continued in the last year, with the Canadian government officially agreeing to fully finance the $1 billion project in June. Michigan voters also rejected a ballot initiative in November crafted to stop the project, which would have required another round of voter approval for international crossings from the state. The next step is approval from the Obama administration, pursuant to the International Bridge Act of 1972.

Low Carbon

METRO

San Diego – Smarter San Diego: Expanding Access to Electric Vehicles

The deployment of electric vehicle technology in San Diego took exciting steps in 2012. The California Energy Commission awarded UC San Diego, in partnership with two charging manufacturers, a $340,000 grant to build world-leading campus EV infrastructure. In addition, the city of San Diego brought to scale the nation’s first all-electric car-sharing service through Daimler subsidiary car2go, quickly accumulating more than 12,500 members who have taken more than 200,000 trips using the service.

STATE

Connecticut – Green Bank Deployment and Replication

The Connecticut Clean Energy Finance and Investment Authority (CEFIA) has both begun to make and facilitate clean energy and energy efficiency investments, and emerged as a model for other states. In 2012, CEFIA invested in new projects including solar PV deployment, energy efficient installations on the state’s college campuses, and a 15 MW fuel cell power plant in Bridgeport, CT, one of the largest in the world. In June, Connecticut Governor Dannel Malloy signed legislation enabling CEFIA to manage a new commercial property-assessed clean energy (PACE) program, enabling property owners to take out low-interest loans for energy-efficiency upgrades or onsite renewable energy via CEFIA-backed PACE bonds, paid back with energy cost savings. This month, New York Governor Andrew Cuomo announced a similar $1 billion “green bank,” and states like Hawaii, Montana, Rhode Island and California are considering similar initiatives.

Innovation

METRO

The Manhattan Community Board approved Cornell’s land use plan for the flagship Applied Sciences NYC campus on Roosevelt Island. This January Cornell welcomes students to its initial “beta class” for a one-year master’s of engineering program temporarily housed in Google’s New York City headquarters. In addition, New York City announced two new Applied Sciences NYC campuses within the city. A consortium led by New York University is establishing a Center for Urban and Science Progress (CUSP) in Brooklyn, and Columbia University is creating a new Institute for Data Science on the University’s main campus in Morningside Heights.

STATE

Tennessee – Launching Regional Startup Ecosystems

Tennessee’s entrepreneurship and innovation efforts expanded in 2012 with the creation of LaunchTN, a new five-year public-private partnership overseeing all of the state’s entrepreneurship and innovation programs—including the regionally-focused INCITE Co-Investment Fund, highlighted among last year’s Innovations to Watch. Over the last year, Tennessee’s nine regional business accelerators, under guidance from LaunchTN, provided support to nearly 100 early-stage companies, which together raised over $17 million in private capital and created over 200 jobs. The INCITE fund also invested $7.1 million in Tennessee-based companies, matched by $18.6 million in private investment. These investments, paired with a focus on tech transfer and commercialization, has driven a dramatic increase in startups spun out of state research institutions—up 70 percent in the last year and 200 percent in the past two years. To ensure these efforts are sustained, LaunchTN named a board of directors that includes some of the state’s leading entrepreneurs and investors as well as representatives from some of the state’s leading research institutions and companies including Vanderbilt University, Oak Ridge National Lab, Eastman Chemical Company, FedEx, and Smith & Nephew.

Opportunity

METRO

Seattle, WA – A Race to the Top Road Map

The Road Map Project in Greater Seattle got a substantial endorsement and support in 2012 in the form of a federal Race to the Top grant. A consortium of the seven school districts involved, which cover 261 schools serving 150,000 students, were awarded $40 million over four years—the largest grant awarded—to support the project’s integrated and personalized cradle-to-college approach, with funding for early learning, STEM education, and college preparation.

STATE

North Carolina – Progress on Pathways to Success

For the North Carolina Community College System (NCCCS)’s comprehensive statewide community college initiative SuccessNC, 2011 was a year of identifying strategies, and 2012 was the first full year of implementation and execution. So in the last year, a number of SuccessNC’s comprehensive statewide strategies have seen significant developments, from new pilots to fully implemented programs. The “Career and College Promise,” for example, (which was implemented in 2012) is a partnership with the North Carolina Department of Public Instruction and University of North Carolina System, which offers dual-enrollment between high schools and community colleges with a pathway to UNC college credit, a credential, certificate or diploma in a technical career, or a high school diploma and two years of college credit in just four to five years. And SuccessNC’s “Code Green Super Curriculum Improvement Project,” (which is being piloted now and will be rolled out beginning in fall 2013) streamlines technical education in core skills to be better aligned with industry-recognized credentials and integrates the fast-growing, cross-industry topics of clean technology and energy efficiency.

Governance

METRO

Northeast Ohio– Magnet: Attracting New Partners

Northeast Ohio’s Partnership for Regional Innovation Services to Manufacterers (PRISM), launched by the region’s business planning initiative, has expanded its reach in 2012. The Manufacturing Advocacy and Growth Network (Magnet), which manages PRISM, announced a partnership in October with four universities—Cleveland State University, Case Western Reserve, Lorain County Community College, and the University of Akron. Magnet will now be able to connect small and medium sized manufacturers in the region with faculty, students, facilities and equipment in the specific areas of specialty for each institution (e.g. polymers at the University of Akron), to facilitate research and product development. The partnership is part of Magnet’s aggressive growth strategy: it has worked with 12 firms to date who project the collaboration will lead to $275 million in new revenue and 450 new jobs by 2014, and hopes to reach more than 100 firms by 2017.

STATE

New York – Regional Economic Development Goes Two Rounds

New York State’s bottom-up regional economic development planning competition, featured in our 2012 Innovations to Watch for state governance, saw the beginning of implementation of the first round of regional plans as well as a new round of awards in the a last year. Each of the “best plan” regions saw significant progress in developing their plans: Western New York, centered around Buffalo, for example, completed the “site control” phase in construction of its new Industrial Trade Center; North Country secured $30 million in Industrial Revenue Bonds to fund a new biomass electric facility; Central New York supported construction of the CNY Biotech Accelerator, scheduled for completion in 2013; and the Long Island’s publically-supported research collaborative launched a public-private emerging technologies commercialization fund. And throughout the state, the councils have become central to coordinating any economic development initiatives. In December, Governor Andrew Cuomo announced $738 million for the second round of regional council funding, with the Finger Lakes, Mid-Hudson, and Southern Tier regions winning this year’s “best plan” awards.

Propelled by private entrepreneurship, technology gains, and public support, clean energy and
energy efficiency solutions began to proliferate in recent years. However, federal policy gridlock and state budget challenges are now jeopardizing the availability of government finance, exacerbating the serious finance challenges that impede the large-scale deployment of low-carbon energy solutions.

Fortunately a number of states are now exploring a variety of ways to leverage scarce public
resources with sophisticated banking and finance mechanisms. Epitomized by Connecticut’s
Clean Energy Finance and Investment Authority (CEFIA), the proposed new finance entities entail
the creation by states of dedicated clean energy banks that leverage public money with private sector funds and expertise.

While these banks can take different forms based on each state’s unique circumstances, they
essentially combine scarce public resources with private sector funds and then leverage those
funds to invest in attractive clean energy and energy efficiency projects. A timely benefit of
the low-cost financing that these banks will make available is that it will reduce clean energy
projects’ dependence on expiring federal grants, tax credits, and subsidies and lower the cost of
these projects enough to make them cost-competitive with conventional technologies.

Along these lines, state leaders can choose among at least three bank models. They may:

Establish, as in Connecticut, a quasi-public corporation into which are combined existing state clean energy and energy efficiency funds so as to permit private investment in the bank and enable the new entity to make loans and leverage its capital with private capital

Repurpose portions of one or more existing financing authorities from a grant to a lending
model and then through a partnership agreement combine the financing authority’s funds
with private funds

Adjust an existing or new infrastructure bank so as to attach a clean energy finance bank to
fund energy projects to a bank lending to traditional infrastructure projects

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Authors

Propelled by private entrepreneurship, technology gains, and public support, clean energy and
energy efficiency solutions began to proliferate in recent years. However, federal policy gridlock and state budget challenges are now jeopardizing the availability of government finance, exacerbating the serious finance challenges that impede the large-scale deployment of low-carbon energy solutions.

Fortunately a number of states are now exploring a variety of ways to leverage scarce public
resources with sophisticated banking and finance mechanisms. Epitomized by Connecticut’s
Clean Energy Finance and Investment Authority (CEFIA), the proposed new finance entities entail
the creation by states of dedicated clean energy banks that leverage public money with private sector funds and expertise.

While these banks can take different forms based on each state’s unique circumstances, they
essentially combine scarce public resources with private sector funds and then leverage those
funds to invest in attractive clean energy and energy efficiency projects. A timely benefit of
the low-cost financing that these banks will make available is that it will reduce clean energy
projects’ dependence on expiring federal grants, tax credits, and subsidies and lower the cost of
these projects enough to make them cost-competitive with conventional technologies.

Along these lines, state leaders can choose among at least three bank models. They may:

Establish, as in Connecticut, a quasi-public corporation into which are combined existing state clean energy and energy efficiency funds so as to permit private investment in the bank and enable the new entity to make loans and leverage its capital with private capital

Repurpose portions of one or more existing financing authorities from a grant to a lending
model and then through a partnership agreement combine the financing authority’s funds
with private funds

Adjust an existing or new infrastructure bank so as to attach a clean energy finance bank to
fund energy projects to a bank lending to traditional infrastructure projects

Downloads

Authors

]]>
http://www.brookings.edu/research/papers/2012/09/12-state-infrastructure-investment-puentes?rssid=state+metro+innovation{D1016FB2-4B56-4EC2-92D5-C378D2A3E9BB}http://webfeeds.brookings.edu/~/65486339/0/brookingsrss/projects/statemetroinnovation~Banking-on-Infrastructure-Enhancing-State-Revolving-Funds-for-TransportationBanking on Infrastructure: Enhancing State Revolving Funds for Transportation

In recent years, states and the federal government experimented with a set of innovative finance mechanisms, credit programs, and revolving loan funds to stretch public and private dollars and support the kind of infrastructure investments necessary to build the next economy.

For transportation projects, much of this support comes in the form of below market revolving loans and loan guarantees from state infrastructure banks (SIBs.) Since established in the 1990s they have provided billions in financing for more than 1,000 projects mostly focused on the 100 largest metropolitan areas. However, this activity is highly concentrated in just a few states as many SIBs are underutilized or inactive. This research shows that SIBs can be valuable tools for delivering
infrastructure projects and can generate more investment per dollar than traditional federal and state grant programs.

This report recommends that U.S. states should:

Align federal and state roles and responsibilities to streamline project delivery and ensure loan capacity is fully utilized

Ensure the long-term sustainability of revolving infrastructure funds by leveraging capitalization and reach a broader range of sponsors and projects

Develop partnerships with local public and private actors so projects have high economic,
environmental, or social effects

Downloads

Authors

In recent years, states and the federal government experimented with a set of innovative finance mechanisms, credit programs, and revolving loan funds to stretch public and private dollars and support the kind of infrastructure investments necessary to build the next economy.

For transportation projects, much of this support comes in the form of below market revolving loans and loan guarantees from state infrastructure banks (SIBs.) Since established in the 1990s they have provided billions in financing for more than 1,000 projects mostly focused on the 100 largest metropolitan areas. However, this activity is highly concentrated in just a few states as many SIBs are underutilized or inactive. This research shows that SIBs can be valuable tools for delivering
infrastructure projects and can generate more investment per dollar than traditional federal and state grant programs.

This report recommends that U.S. states should:

Align federal and state roles and responsibilities to streamline project delivery and ensure loan capacity is fully utilized

Ensure the long-term sustainability of revolving infrastructure funds by leveraging capitalization and reach a broader range of sponsors and projects

Develop partnerships with local public and private actors so projects have high economic,
environmental, or social effects

Many leaders in states, cities, and metropolitan areas across the country are exploring ways to help their firms tap into expanding markets worldwide to grow jobs at home. This brief serves as a how-to-guide for private, nonprofit, and government leaders in metro areas who are interested in developing effective action-oriented metropolitan export plans and initiatives customized to their region’s unique assets and capacities. It builds on lessons learned from a one-year pilot (2011–2012) where the Metropolitan Policy Program at Brookings collaborated with leaders in four metro areas to develop localized export plans.

Organize for Success — The planning effort must have the stated commitment of local leaders and be well-organized at the outset to create a culture change in economic development practice.

Produce a Data-Driven Market Scan — A credible export plan is built on a solid foundation of data and information about the region’s export performance and potential.

Capture Local Market Insight — At the heart of the local market assessment is direct input from firms and service providers obtained through surveys and one-on-one interviews.

Champion Exports Now — Promoting and communicating the importance of exports to the region’s long-term economic future is critical to ensure the export plan is embraced.

Develop a Customized Export Plan — A clear, easy-to-read document will serve as a strong vehicle for galvanizing stakeholders to act on and support the exports opportunity.

Prepare for Implementation — A detailed implementation (or business) plan that delineates how the export plan will be executed must include details on deliverables, phasing, budgets, and the division of labor among lead organizations.

Identify and Promote Policy Priorities — Metro leaders should articulate and advance a state and federal policy agenda that will foster an environment for enabling the region’s exports to thrive.

Track and Publicize Progress — The metro export team will need to identify metrics that are most realistic to collect locally and dedicate resources to maintaining, analyzing, and reporting progress.

Mainstream Exports into Economic Development — For a region’s economy to fully benefit from international trade, exports must be an integral part of a multi-pronged economic growth agenda that includes innovation, transportation and logistics, and global talent.

Downloads

Authors

Many leaders in states, cities, and metropolitan areas across the country are exploring ways to help their firms tap into expanding markets worldwide to grow jobs at home. This brief serves as a how-to-guide for private, nonprofit, and government leaders in metro areas who are interested in developing effective action-oriented metropolitan export plans and initiatives customized to their region’s unique assets and capacities. It builds on lessons learned from a one-year pilot (2011–2012) where the Metropolitan Policy Program at Brookings collaborated with leaders in four metro areas to develop localized export plans.

Organize for Success — The planning effort must have the stated commitment of local leaders and be well-organized at the outset to create a culture change in economic development practice.

Produce a Data-Driven Market Scan — A credible export plan is built on a solid foundation of data and information about the region’s export performance and potential.

Capture Local Market Insight — At the heart of the local market assessment is direct input from firms and service providers obtained through surveys and one-on-one interviews.

Champion Exports Now — Promoting and communicating the importance of exports to the region’s long-term economic future is critical to ensure the export plan is embraced.

Develop a Customized Export Plan — A clear, easy-to-read document will serve as a strong vehicle for galvanizing stakeholders to act on and support the exports opportunity.

Prepare for Implementation — A detailed implementation (or business) plan that delineates how the export plan will be executed must include details on deliverables, phasing, budgets, and the division of labor among lead organizations.

Identify and Promote Policy Priorities — Metro leaders should articulate and advance a state and federal policy agenda that will foster an environment for enabling the region’s exports to thrive.

Track and Publicize Progress — The metro export team will need to identify metrics that are most realistic to collect locally and dedicate resources to maintaining, analyzing, and reporting progress.

Mainstream Exports into Economic Development — For a region’s economy to fully benefit from international trade, exports must be an integral part of a multi-pronged economic growth agenda that includes innovation, transportation and logistics, and global talent.

Editor's Note: During the 56th Annual Sister Cities International Conference in Jacksonville, Amy Liu presented an assessment of the U.S. economy and how metro areas, specifically sister cities, can collaborate to boost exports and better connect with global markets, thus creating more jobs locally.

I am honored to be joining you for your 56th annual conference.

Much has changed in the world in the last 56 years. I have no doubt that Sister Cities has adapted nimbly to those changing times, strengthening relationships in new cities as sleeping markets rise and as civil and economic unrests demand different levels of diplomacy and partnership.

But I believe I have been invited here today to urge you to keep evolving. As the conference title states, it is a “new era.” And we must adjust accordingly.

First, jobs, jobs, jobs. The continued sluggishness of the U.S. and global economy makes this urgent. But, I will tell you that this is not just a flashing moment. Our nation and our regional economies face long-term structural challenges.

Second, global engagement. To thrive, our economy needs to be more globally integrated, not less. We must export and trade in higher volumes if we hope to accelerate innovation in American goods and services and grow jobs here at home.

Third, cities. We are in a global urban age. Not just because the majority of world inhabitants now live in cities. But because cities and metro areas are the engines of the global economy. If they prosper, our nation will prosper.

Thus, Sister Cities is uniquely positioned to act on these three critical moments in ways few organization are such situated. Your networks and relationships are vast. Your global intelligence is deep. Embracing economic exchanges will help your local economies—and even your organization—excel in the new global economic order.

Let me be clear, times have changed. The U.S. economy is undergoing a major economic restructuring which demands a structural response. The Great Recession was not the same as its predecessors. The job loss this time was steeper, the impact deeper, and the recovery slower because this was a structural recession.

The core structural problem: Nearly all of the incremental job growth over the last two decades came from non-tradable sectors, such as real estate, retail, and government. This was the eye-popping stat issued by Nobel economist Michael Spence. In short, we stopped innovating and producing jobs in value-added industries that create wealth, grow local industries, and make our American marketplace distinct from our competitors.

The other big structural shift: Economic growth is increasingly taking place outside the U.S.

In 2010, the combined global GDP of the BIC nations surpassed that of the U.S. for the first time, making up one-fifth of the world economy. That shift is expected to accelerate in the coming years while the U.S. share of global GDP is forecasted to stay the same.

The rise of the BICs is also in part a reflection of the rise of global metros. Rapid industrialization has been matched by rapid urbanization. More than half of the world’s population now lives in cities, and that share is expected to grow to 60 percent in 2030 and 70 percent by 2050.

With rapid urbanization comes the rise of the global middle class which is driving the growth of consumption. OECD predicts that, despite the recession, consumption is expected to rise from $21 trillion today to $31 trillion by 2020, mostly due to the growth in Asia and Latin America.

We view these trends as less a threat but a market opportunity.

Against this back drop, let me tell you what the data is telling us. The winners in the next economy will be those who strengthen global assets and tap new sources of aggregate demand.

The leaders in the next economy will innovate in manufacturing. While manufacturing has contracted as a share of the overall economy, it is becoming leaner and more advanced. Thus, manufacturing jobs are recovering faster than the economy as a whole, at 2.3 percent in the third quarter of last year compared to 1.4 percent nationally. The manufacturing sector has added about 350,000 jobs in the last two years.

For those who remain skeptical about U.S. competitive advantage in manufacturing, this is not the industry of yesterday. The U.S. is the 3rd largest manufacturing exporter in the world b/c manufacturing remains a critical part of our innovation cycle. U.S. manufacturing employs 35 percent of all of our scientists and engineers, invests 68 percent of all R&D; and generates 90 percent of all patents.

Leaders will also need to innovate in services. In fact, services, such as business consulting, education, architecture and planning, are the fastest growing segment of our export economy, and the U.S. has a trade surplus in services.

Within the services sector, expenditures of foreign students in U.S. colleges is growing steadily. We now have more than 720,000 international students studying in the United States, led by those from China, India and Korea. That sector represents $21.2 billion in U.S. service exports.

Leaders in the next economy will also invent and deploy clean economy goods and services.

Rapid urbanization worldwide has pushed up the global demand for environmentally friendly goods and services, such as energy efficient appliances and building technologies, smart grid, sustainable land use planning and infrastructure, and organic foods. We are meeting that demand. In fact the U.S. has a sizeable clean economy, representing 2.7 million jobs.

The upshot: U.S. clean economy products generated $54 billion in exports, two times more value per job than the typical U.S. export.

Additionally, the regions that prosper will be those that take advantage of global demand. The post-recession reality has made that more urgent.

According to our recent Global MetroMonitor, 90 percent of the fastest growing markets among the 200 largest world cities were located outside of the U.S., Western Europe, and earthquake-ravaged Japan.

In fact, there are more than 20 markets around the globe that did not experience this last recession or have already fully recovered—Shanghai, Shenzhen, Mumbai in Asia, Istanbul in Europe, and Santiago and Buenos Aires in Latin America.

Bottom line: If we are to grow, our firms must look outside of the U.S. and tap emerging markets and global consumption as a source of growth here at home.

And here is the evidence: Those firms who embraced international sales drove our economic recovery. Exports were responsible for 46 percent of U.S. GDP growth between 2010 and 2011—which is remarkable since exports make up only 13 percent of the GDP of the U.S.—compared to much higher shares in China, Canada, and the entire EU.

Going global pays off too for small and mid-sized firms. Those manufacturers who exported saw their revenues grow, by 37 percent, through 2009, compared to non-exporters who saw their revenues decline by 7 percent.

Selling globally simply makes good business sense.

Second, it will be metro areas that will drive the transition to the next economy.

Metro areas are the engines of the global economy b/c they aggregate and integrate the very market assets that drive growth. Even though the 100 largest metro areas sit on just 12 percent of the nation’s land area, they dominate in innovation, by attracting 94 percent of the nation’s venture capital. They are the producers of our trade economy, generating 75 percent of all services exports. And they are the hubs of supply chains and goods movements, handling 82 percent of the nation’s air freight.

As a result of those assets, the 100 largest metro areas generate 75 percent of the nation’s GDP.

This is not some coastal phenomenon. In fact, metro areas generate the majority of economic output in 47 of the 50 states, including such traditionally “rural” states as Nebraska, Iowa, Kansas, and Arkansas.

And metro areas generate the majority of export activities in 30 out 50 states.

The sizeable role of agricultural products in exports explains why metro export share in states is smaller. But even here, our cities and metro areas play an important role, generating nearly one quarter of U.S. agricultural exports. This is not a surprise given that there are rural parts of many metro areas. In fact more than half of all rural residents in the U.S. live inside our metro areas.

And export activities do vary by metro area, reinforcing the importance of customized approaches to boosting exports and trade. For instance, here are three different metro areas, arrayed by size, Chicago, San Antonio, and here Jacksonville.

Let’s start with Chicago. It has by far the largest export volume at $53 billion, ranking it third in the nation among metros. But, looking down vertically to export growth, leaders here may not be happy that exports grew only modestly at 11.8 percent, ranking it only 34th nationally.

San Antonio, which has a strong sister cities and trade promotion effort, should be thrilled that it had the seventh fastest export growth post recession, at a rate of 15.5 percent. But the share of its economy that comes from trade is quite low, at only 7.9 percent, far below the national average of 13 percent, ranking it 79th nationally. That means there may be much more work to do to ensure that more parts of the economy are participating in global trade.

And Jacksonville, a port city, is handling tons of goods movements at its port. But it may be shipping everyone else’s goods globally, versus those goods made by firms and workers in Jacksonville. An export strategy here would help its own area firms contribute to greater export volume, and improving the share of the economy directly benefiting from trade, which currently ranks the metro area 90th in the nation in this regard.

The size of a metro area’s manufacturing base can explain some of the export trends there. With manufacturers contributing 61 percent of the nation’s export economy, the more manufacturers a region has, the more likely it can take advantage of global trade.

Chicago has a high number and share of manufacturing jobs, perhaps explaining its relatively high export volume and export intensity.

San Antonio and Jacksonville are large services economies with small shares made up of manufacturers.

Yet San Antonio’s surge in manufacturing jobs recently, ranking it 20th nationally, may explain some of the export growth trends as well.

The bottom line is that understanding your economic starting point is key to global economic success.

That leads me to my final point: The Sister Cities program and members can help metro economies better tap the benefits of global trade.

In my work and travels, I have heard an increasing drumbeat of requests for how local and regional leaders can work with their Sister Cities affiliates to coordinate and join up efforts to grow jobs and economic opportunity.

Where is the demand coming from? First, the president launched a national challenge to double exports in five years. And the president’s cabinet agencies, led by Commerce, have been working to forge partnerships with state, local, and corporate leaders to meet this national goal.

At the same time, Brookings launched the Metro Export Initiative. That included a signature report, “Export Nation,” that tracks the export performance of the 100 largest metro areas, and a collaboration with four metro areas—greater Los Angeles, Portland, Minneapolis-St Paul, and Syracuse/Central New York—each of which have formally launched their own metro export plans.

Those four metro export plans in turn inspired the U.S. Conference of Mayors to embrace global engagement as a key platform. Last year, as chair of USCM, Mayor Villaraigosa announced a metro export challenge, urging 25 cities to lead and adopt a metro export plan in the next 18 months.

So they did. This past April, Mayor Emanuel announced a plan to double exports in five years. One key partner in their export strategy? The Sister Cities program.

Last month, the entrepreneurial mayors of Louisville and Lexington, KY joined forces to announce an export plan for the Bluegrass Region. The goal: to increase by 50 percent the number of firms those are selling goods abroad.

And more local and regional efforts will come on line. The question is: Is Sister Cities prepared to be a partner?

So what is in a metro export plan? Let’s take a closer look at a few of the plans that have been launched.

What I like about these plans is that it exemplifies exactly why you cannot double exports nationally from the top but instead from the bottom up. While all four metro areas set a goal of doubling exports in five years, each resulted in very different strategies to meet that goal, building on their unique competitive advantages.

Simply, there is no one size fits all approach to doubling exports.

Portland: Two interesting strategies here. First, they learned that nearly two thirds of the region’s exports come from Intel and the computer/electronics sector. While the global company does not need export assistance, the regional leaders made it their top priority to ensure that Portland remains a competitive location for the computer electronics industry, perhaps by strengthening its supply chain, as the sector is a major source of export-related job growth there. This fourth strategy, “we build green cities,” an intentional approach to target and promote a suite of goods and services on a brand they are known for globally— sustainability—including sustainable land use, design and planning, EV technology, clean energy buses, and transit cars.

And these are the diverse groups involved in designing and executing the plan.

Syracuse, NY: A radically different economy, dominated by no Fortune 500 firms but small- and mid-sized firms. Radical under-exporters. Two strengths … very high service exports because of eds and meds, and close proximity to Canada. Embedded in the third strategy, is a goal to market quality health care at their top university hospitals to Canadians who want more choice and speed in catastrophic and emergency care.

In the next few weeks, Brookings will release a guide for leaders like yourselves on how you can produce your own export plans. It will include detailed 10 steps you can take and give you data tools and resources to make the task easier. Look for it on our website in coming weeks.
. For these plans to be effective requires the right leadership at the table. No single organization, like Sister Cities, can undertake an export strategy on their own. Only 1 percent of American firms sell a product or service abroad. To make inroads on global trade engagement requires a culture shift, as you well know, across many institutions and programs to break out of our historic insularity. Thus, government at all levels, businesses and regional economic development groups, universities and their international business programs, and ports who are also on front lines of goods movement— all these groups must be working together to change market behavior toward greater international sales and greater global fluency.

And while I’ve spent a lot of time talking about exports, exports is only one piece of a larger global economic strategy. To be truly effective on the global stage, we need to continue to innovate in goods and services. We need skilled workers to adopt and lead that innovation. We need to leverage our international students and immigrant entrepreneurs because they are naturally globally aware, fluent, and with ties to a foreign market. We certainly need two-way trade and investment. And we need a competitive air and freight infrastructure network. In short, we need a comprehensive approach and Sister Cities, and cities in general, can act in many ways to help their regional economies be more globally integrated.

Thus, there are other models and initiatives out there, beyond metro export plans, that exemplify the continuum of global economic interventions, many of which have been showcased at this conference. China-SF, launched by the city of San Francisco but is now a stand alone entity, is a city to city based program, with three offices in China that focuses on everything from policy innovation exchanges, university exchanges, FDI, and a new partnership with SF Made to link San Francisco manufacturers to Chinese markets.

USC has an MBA Exports Champion program that not only deploys talented business school students to foreign firms abroad, but to U.S. firms interested in exporting. These students help them conduct market research and help businesses integrate international sales into their short- and long-term business plans.

In closing, to move forward economically, we must go back to our historic roots, to a time when the global economy evolved before the rise of nation states when historical trade routes flowed through cities like the 15th century Silk Road that connected Asian cities and the silk, tea, and spices they produced to cities in Europe, the Mediterranean, and Africa.

Sister Cities could be our century’s new global ambassadors, forging closer economic ties and partnerships between world cities. This would be the fullest expression of your motto: Connect globally. Thrive Locally.

I hope you rise to that aspiration.

Thank you.

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Editor's Note: During the 56th Annual Sister Cities International Conference in Jacksonville, Amy Liu presented an assessment of the U.S. economy and how metro areas, specifically sister cities, can collaborate to boost exports and better connect with global markets, thus creating more jobs locally.

I am honored to be joining you for your 56th annual conference.

Much has changed in the world in the last 56 years. I have no doubt that Sister Cities has adapted nimbly to those changing times, strengthening relationships in new cities as sleeping markets rise and as civil and economic unrests demand different levels of diplomacy and partnership.

But I believe I have been invited here today to urge you to keep evolving. As the conference title states, it is a “new era.” And we must adjust accordingly.

First, jobs, jobs, jobs. The continued sluggishness of the U.S. and global economy makes this urgent. But, I will tell you that this is not just a flashing moment. Our nation and our regional economies face long-term structural challenges.

Second, global engagement. To thrive, our economy needs to be more globally integrated, not less. We must export and trade in higher volumes if we hope to accelerate innovation in American goods and services and grow jobs here at home.

Third, cities. We are in a global urban age. Not just because the majority of world inhabitants now live in cities. But because cities and metro areas are the engines of the global economy. If they prosper, our nation will prosper.

Thus, Sister Cities is uniquely positioned to act on these three critical moments in ways few organization are such situated. Your networks and relationships are vast. Your global intelligence is deep. Embracing economic exchanges will help your local economies—and even your organization—excel in the new global economic order.

Let me be clear, times have changed. The U.S. economy is undergoing a major economic restructuring which demands a structural response. The Great Recession was not the same as its predecessors. The job loss this time was steeper, the impact deeper, and the recovery slower because this was a structural recession.

The core structural problem: Nearly all of the incremental job growth over the last two decades came from non-tradable sectors, such as real estate, retail, and government. This was the eye-popping stat issued by Nobel economist Michael Spence. In short, we stopped innovating and producing jobs in value-added industries that create wealth, grow local industries, and make our American marketplace distinct from our competitors.

The other big structural shift: Economic growth is increasingly taking place outside the U.S.

In 2010, the combined global GDP of the BIC nations surpassed that of the U.S. for the first time, making up one-fifth of the world economy. That shift is expected to accelerate in the coming years while the U.S. share of global GDP is forecasted to stay the same.

The rise of the BICs is also in part a reflection of the rise of global metros. Rapid industrialization has been matched by rapid urbanization. More than half of the world’s population now lives in cities, and that share is expected to grow to 60 percent in 2030 and 70 percent by 2050.

With rapid urbanization comes the rise of the global middle class which is driving the growth of consumption. OECD predicts that, despite the recession, consumption is expected to rise from $21 trillion today to $31 trillion by 2020, mostly due to the growth in Asia and Latin America.

We view these trends as less a threat but a market opportunity.

Against this back drop, let me tell you what the data is telling us. The winners in the next economy will be those who strengthen global assets and tap new sources of aggregate demand.

The leaders in the next economy will innovate in manufacturing. While manufacturing has contracted as a share of the overall economy, it is becoming leaner and more advanced. Thus, manufacturing jobs are recovering faster than the economy as a whole, at 2.3 percent in the third quarter of last year compared to 1.4 percent nationally. The manufacturing sector has added about 350,000 jobs in the last two years.

For those who remain skeptical about U.S. competitive advantage in manufacturing, this is not the industry of yesterday. The U.S. is the 3rd largest manufacturing exporter in the world b/c manufacturing remains a critical part of our innovation cycle. U.S. manufacturing employs 35 percent of all of our scientists and engineers, invests 68 percent of all R&D; and generates 90 percent of all patents.

Leaders will also need to innovate in services. In fact, services, such as business consulting, education, architecture and planning, are the fastest growing segment of our export economy, and the U.S. has a trade surplus in services.

Within the services sector, expenditures of foreign students in U.S. colleges is growing steadily. We now have more than 720,000 international students studying in the United States, led by those from China, India and Korea. That sector represents $21.2 billion in U.S. service exports.

Leaders in the next economy will also invent and deploy clean economy goods and services.

Rapid urbanization worldwide has pushed up the global demand for environmentally friendly goods and services, such as energy efficient appliances and building technologies, smart grid, sustainable land use planning and infrastructure, and organic foods. We are meeting that demand. In fact the U.S. has a sizeable clean economy, representing 2.7 million jobs.

The upshot: U.S. clean economy products generated $54 billion in exports, two times more value per job than the typical U.S. export.

Additionally, the regions that prosper will be those that take advantage of global demand. The post-recession reality has made that more urgent.

According to our recent Global MetroMonitor, 90 percent of the fastest growing markets among the 200 largest world cities were located outside of the U.S., Western Europe, and earthquake-ravaged Japan.

In fact, there are more than 20 markets around the globe that did not experience this last recession or have already fully recovered—Shanghai, Shenzhen, Mumbai in Asia, Istanbul in Europe, and Santiago and Buenos Aires in Latin America.

Bottom line: If we are to grow, our firms must look outside of the U.S. and tap emerging markets and global consumption as a source of growth here at home.

And here is the evidence: Those firms who embraced international sales drove our economic recovery. Exports were responsible for 46 percent of U.S. GDP growth between 2010 and 2011—which is remarkable since exports make up only 13 percent of the GDP of the U.S.—compared to much higher shares in China, Canada, and the entire EU.

Going global pays off too for small and mid-sized firms. Those manufacturers who exported saw their revenues grow, by 37 percent, through 2009, compared to non-exporters who saw their revenues decline by 7 percent.

Selling globally simply makes good business sense.

Second, it will be metro areas that will drive the transition to the next economy.

Metro areas are the engines of the global economy b/c they aggregate and integrate the very market assets that drive growth. Even though the 100 largest metro areas sit on just 12 percent of the nation’s land area, they dominate in innovation, by attracting 94 percent of the nation’s venture capital. They are the producers of our trade economy, generating 75 percent of all services exports. And they are the hubs of supply chains and goods movements, handling 82 percent of the nation’s air freight.

As a result of those assets, the 100 largest metro areas generate 75 percent of the nation’s GDP.

This is not some coastal phenomenon. In fact, metro areas generate the majority of economic output in 47 of the 50 states, including such traditionally “rural” states as Nebraska, Iowa, Kansas, and Arkansas.

And metro areas generate the majority of export activities in 30 out 50 states.

The sizeable role of agricultural products in exports explains why metro export share in states is smaller. But even here, our cities and metro areas play an important role, generating nearly one quarter of U.S. agricultural exports. This is not a surprise given that there are rural parts of many metro areas. In fact more than half of all rural residents in the U.S. live inside our metro areas.

And export activities do vary by metro area, reinforcing the importance of customized approaches to boosting exports and trade. For instance, here are three different metro areas, arrayed by size, Chicago, San Antonio, and here Jacksonville.

Let’s start with Chicago. It has by far the largest export volume at $53 billion, ranking it third in the nation among metros. But, looking down vertically to export growth, leaders here may not be happy that exports grew only modestly at 11.8 percent, ranking it only 34th nationally.

San Antonio, which has a strong sister cities and trade promotion effort, should be thrilled that it had the seventh fastest export growth post recession, at a rate of 15.5 percent. But the share of its economy that comes from trade is quite low, at only 7.9 percent, far below the national average of 13 percent, ranking it 79th nationally. That means there may be much more work to do to ensure that more parts of the economy are participating in global trade.

And Jacksonville, a port city, is handling tons of goods movements at its port. But it may be shipping everyone else’s goods globally, versus those goods made by firms and workers in Jacksonville. An export strategy here would help its own area firms contribute to greater export volume, and improving the share of the economy directly benefiting from trade, which currently ranks the metro area 90th in the nation in this regard.

The size of a metro area’s manufacturing base can explain some of the export trends there. With manufacturers contributing 61 percent of the nation’s export economy, the more manufacturers a region has, the more likely it can take advantage of global trade.

Chicago has a high number and share of manufacturing jobs, perhaps explaining its relatively high export volume and export intensity.

San Antonio and Jacksonville are large services economies with small shares made up of manufacturers.

Yet San Antonio’s surge in manufacturing jobs recently, ranking it 20th nationally, may explain some of the export growth trends as well.

The bottom line is that understanding your economic starting point is key to global economic success.

That leads me to my final point: The Sister Cities program and members can help metro economies better tap the benefits of global trade.

In my work and travels, I have heard an increasing drumbeat of requests for how local and regional leaders can work with their Sister Cities affiliates to coordinate and join up efforts to grow jobs and economic opportunity.

Where is the demand coming from? First, the president launched a national challenge to double exports in five years. And the president’s cabinet agencies, led by Commerce, have been working to forge partnerships with state, local, and corporate leaders to meet this national goal.

At the same time, Brookings launched the Metro Export Initiative. That included a signature report, “Export Nation,” that tracks the export performance of the 100 largest metro areas, and a collaboration with four metro areas—greater Los Angeles, Portland, Minneapolis-St Paul, and Syracuse/Central New York—each of which have formally launched their own metro export plans.

Those four metro export plans in turn inspired the U.S. Conference of Mayors to embrace global engagement as a key platform. Last year, as chair of USCM, Mayor Villaraigosa announced a metro export challenge, urging 25 cities to lead and adopt a metro export plan in the next 18 months.

So they did. This past April, Mayor Emanuel announced a plan to double exports in five years. One key partner in their export strategy? The Sister Cities program.

Last month, the entrepreneurial mayors of Louisville and Lexington, KY joined forces to announce an export plan for the Bluegrass Region. The goal: to increase by 50 percent the number of firms those are selling goods abroad.

And more local and regional efforts will come on line. The question is: Is Sister Cities prepared to be a partner?

So what is in a metro export plan? Let’s take a closer look at a few of the plans that have been launched.

What I like about these plans is that it exemplifies exactly why you cannot double exports nationally from the top but instead from the bottom up. While all four metro areas set a goal of doubling exports in five years, each resulted in very different strategies to meet that goal, building on their unique competitive advantages.

Simply, there is no one size fits all approach to doubling exports.

Portland: Two interesting strategies here. First, they learned that nearly two thirds of the region’s exports come from Intel and the computer/electronics sector. While the global company does not need export assistance, the regional leaders made it their top priority to ensure that Portland remains a competitive location for the computer electronics industry, perhaps by strengthening its supply chain, as the sector is a major source of export-related job growth there. This fourth strategy, “we build green cities,” an intentional approach to target and promote a suite of goods and services on a brand they are known for globally— sustainability—including sustainable land use, design and planning, EV technology, clean energy buses, and transit cars.

And these are the diverse groups involved in designing and executing the plan.

Syracuse, NY: A radically different economy, dominated by no Fortune 500 firms but small- and mid-sized firms. Radical under-exporters. Two strengths … very high service exports because of eds and meds, and close proximity to Canada. Embedded in the third strategy, is a goal to market quality health care at their top university hospitals to Canadians who want more choice and speed in catastrophic and emergency care.

In the next few weeks, Brookings will release a guide for leaders like yourselves on how you can produce your own export plans. It will include detailed 10 steps you can take and give you data tools and resources to make the task easier. Look for it on our website in coming weeks.
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For these plans to be effective requires the right leadership at the table. No single organization, like Sister Cities, can undertake an export strategy on their own. Only 1 percent of American firms sell a product or service abroad. To make inroads on global trade engagement requires a culture shift, as you well know, across many institutions and programs to break out of our historic insularity. Thus, government at all levels, businesses and regional economic development groups, universities and their international business programs, and ports who are also on front lines of goods movement— all these groups must be working together to change market behavior toward greater international sales and greater global fluency.

And while I’ve spent a lot of time talking about exports, exports is only one piece of a larger global economic strategy. To be truly effective on the global stage, we need to continue to innovate in goods and services. We need skilled workers to adopt and lead that innovation. We need to leverage our international students and immigrant entrepreneurs because they are naturally globally aware, fluent, and with ties to a foreign market. We certainly need two-way trade and investment. And we need a competitive air and freight infrastructure network. In short, we need a comprehensive approach and Sister Cities, and cities in general, can act in many ways to help their regional economies be more globally integrated.

Thus, there are other models and initiatives out there, beyond metro export plans, that exemplify the continuum of global economic interventions, many of which have been showcased at this conference. China-SF, launched by the city of San Francisco but is now a stand alone entity, is a city to city based program, with three offices in China that focuses on everything from policy innovation exchanges, university exchanges, FDI, and a new partnership with SF Made to link San Francisco manufacturers to Chinese markets.

USC has an MBA Exports Champion program that not only deploys talented business school students to foreign firms abroad, but to U.S. firms interested in exporting. These students help them conduct market research and help businesses integrate international sales into their short- and long-term business plans.

In closing, to move forward economically, we must go back to our historic roots, to a time when the global economy evolved before the rise of nation states when historical trade routes flowed through cities like the 15th century Silk Road that connected Asian cities and the silk, tea, and spices they produced to cities in Europe, the Mediterranean, and Africa.

Sister Cities could be our century’s new global ambassadors, forging closer economic ties and partnerships between world cities. This would be the fullest expression of your motto: Connect globally. Thrive Locally.

I hope you rise to that aspiration.

Thank you.

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http://www.brookings.edu/research/speeches/2012/06/13-buffalo-katz?rssid=state+metro+innovation{DF7B0FB7-8443-40FB-9523-F42CD0C86B34}http://webfeeds.brookings.edu/~/65486347/0/brookingsrss/projects/statemetroinnovation~Delivering-the-Next-Economy-in-the-BuffaloNiagara-RegionDelivering the Next Economy in the Buffalo-Niagara Region

Thank you, [University of Buffalo president] Satish [Tripathi], for that introduction and for the invitation to speak at UB Partners Day.

As many of you know, Governor Cuomo made an unprecedented $1 billion commitment to Buffalo in his annual State of the State address on January 4, saying: “Buffalo has the workforce, the talent, the resources, and the will to succeed. We believe in Buffalo. And we’ll put our money where our mouth is.”

The governor’s commitment to Buffalo, and last year’s award to Western New York following the regional economic development competition, illustrates new thinking in this state. Economic development, long dictated top down by Albany and its myriad bureaucracies, is now being driven bottom-up by the cities and the metropolitan areas and the regions where the economy actually concentrates and agglomerates.

A clear signal is being sent to the market—consumers, companies, investors—New York state is “open for business” and Buffalo is “back in business.”

To this end, Governor Cuomo asked me and my colleagues at Brookings to work with a group of local institutions to assess your market position, identify your distinctive assets and advantages, and consider your investment options in light of the best innovations underway in the U.S. and around the world.

For the past few months, it has been a pleasure to work closely with a remarkable set of partners—the UB Regional Institute and Buffalo-Niagara Enterprise—and the Western New York Regional Council and Empire State Development. I want to particularly thank Howard Zemsky, Laura Fulton, Bob Shipley, and Christina Orsi for their invaluable management, research, and guidance throughout this process.

Over the past three months, our institutions have held dozens of meetings to hear from the experts—the men and women who actually own firms, take risks, finance transactions, train workers and build wealth—in other words, co-produce the economy in this city and metropolis.

This is the first step in a longer process that is intended to yield strategic investments that are likely to have high return, create jobs in the near term, and retool your economy for the long haul.

Today I want to give a status report to the community on progress to date and next steps in the process.

My presentation will be divided into three parts:

First, I want to describe the economic vision and practice we are using to guide this investment and our recommendations. In the aftermath of the Great Recession, the U.S. economy is undergoing a slow, painful transition toward an economy fueled by innovation, powered by low carbon, driven by exports, rich with opportunity and led by cities and metropolitan areas. The shift to the next economy is being matched by a new kind of metropolitan economic development, building on the distinctive assets of disparate places and geared to strengthening an ecosystem as much as engaging in one-off transactions with individual firms.

Second, I want to unveil our initial findings about the state of your economy. After decades of depopulation, deindustrialization, and decentralization, Buffalo faces challenges that are well known and well studied. Yet we have found some remarkable assets “hidden in plain sight,” ranging from advanced research & development at your universities to the disproportionate presence of advanced manufacturing and clean economy firms to your enviable location on the border with America’s largest trading partner to the promising development underway in the downtown and nearby to the historic legacy of world class architecture and landscape.

Bottom line: There is a base to build on here that is special and holds real market potential.

Finally, I want to lay out a series of goals for the “Buffalo Billion” that build on your distinctive assets and advantages and then provide examples of best innovations in the U.S. and abroad that could be tailored and adapted to this community. There is absolutely no reason to reinvent the wheel. Communities similarly situated to Buffalo in the U.S., Europe, and elsewhere have successfully retooled their economies and remade their places to great benefit.

You can, and you will, do the same.

So let me start with the broader context for this effort.

At the most basic level, the U.S. needs more jobs—11.3 million by one estimate—to recover the jobs lost during the downturn and keep pace with population growth and labor market dynamics.

There is no easy fix to achieve these twin goals. But one thing is clear: We will need to purposefully restructure our economy from one focused inward and characterized by excessive consumption and debt to one globally engaged and driven by production and innovation.

Or, as I have said before, we must move to a “next economy” that is fueled by innovation, powered by low carbon, driven by exports, and rich with opportunity. Let’s unpack that a little, so we both understand the broader growth model and the special moment we find ourselves in.

The vision begins with innovation—to spur growth through the interplay of invention, commercialization, manufacturing, and skilled workers.

Over the past two decades, the discussion of innovation in the U.S. narrowed, positioning it as something only conducted in the ivory tower or among exceptional entrepreneurs like Steve Jobs.

We forgot something early generations intuitively understood: the inextricable link and virtuous cycle between innovation and manufacturing.

While only about 9 percent of all U.S. jobs are in manufacturing, about 35 percent of all engineers work in manufacturing.

Although the manufacturing sector comprises only 11 percent of GDP, manufacturers account for 68 percent of the spending on R&D that is performed by companies in the United States and are responsible for 90 percent of all patents in the United States.

Going forward, we will innovate less if we do not produce more. We must make things again.

The discussion of innovation naturally leads to the notion that the next economy should be powered by “low carbon” and advanced energy.

Everything is changing.

The energy we use, the infrastructure we build, the homes we live in and the office and retail buildings we frequent, and the products we buy are all shifting from modes that are outdated to systems that are smarter, faster, more technologically enabled and more environmentally sound.

The U.S., on the other hand, treats the clean economy as a political and ideological football, undermining our potential to position the U.S. at the vanguard of the next innovation-led industrial revolution.

An economy that innovates, particularly around clean energy and products, is an economy that can take advantage of rising global demand for quality U.S. products and services.

That is more important than ever. The locus of economic power in the world is shifting.

Together, Brazil, India and China—the BICs—accounted for about a fifth of the global GDP in 2009, surpassing the United States for the first time. By 2015, the BIC share will grow to more than 25 percent.

The top 30 metro performers today are almost exclusively located in Asia and Latin America. The 30 worst metro performers are nearly all located in Europe, the United States and earthquake-ravaged Japan.

This is not a rocket science. The U.S. needs to reorient our economy to take advantage of this new demand. In 2010, exports made up only 13 percent of the GDP of the U.S. compared to 30 percent in China, 29 percent in Canada, and higher levels in India, Japan, and the entire EU.

Finally, the next economy should be opportunity rich, so that working families can earn wages sufficient to attain a middle class life.

Building the next economy is essential here: research shows that firms in export-intense industries, for example, pay workers more and are more likely to provide health and retirement benefits.

Yet building the next economy will require the United States to get real smart, real fast.

Over the next several decades, African Americans and Hispanics will grow from about 25 percent to nearly 40 percent of the working-age population.

Yet the U.S. and this region have sharp racial and ethnic disparities on education. Upgrading the education and skills of the next, more diverse American workforce is a competitive imperative.

This macro growth model is a sharp departure from the one that dominated American thinking pre-recession—one that extolled consumption and excessive financial risk and raised the absurd prospect that the U.S. would somehow become a post industrial economy.

Labor costs are now rising in China, and concerns persist about the protection of intellectual property.

Energy can be cheaper here, and more reliable.

The tsunami in Japan, the world's main supplier of many high tech components, revealed the fragility of far flung supply chains for many U.S. companies.

And, the best news, manufacturing is coming back, fueling 38 percent of the recovery.

We must innovate again. We must make things again. We must embrace clean and green as an environmental imperative and market proposition. We must embrace the world.

This macro model comes to ground in the major cities and metropolitan areas that shape, determine, and deliver the economy.

The real heart of the American economy consists of 100 metropolitan areas that after decades of growth take up only 12 percent of our land mass, but harbor 2/3 of our population, generate 75 percent of our gross domestic product and, on every single indicator that matters—innovation, human capital, infrastructure—punch above their weight at dizzying levels.

This is the power of concentration and agglomeration: the network effect of firms, universities, institutions fertilizing ideas, sharing workers, extending innovation, enhancing competitiveness, and catalyzing growth.

Bottom line: There is no national American economy. Rather, the U.S. economy is a network of powerful metropolitan economies.

One last contextual piece that we have considered during this process.

Across the nation, in the absence of federal leadership, cities and metros are taking control of their own destinies, becoming deliberate and intentional about their economic growth, moving beyond affecting their form to shaping their function.

A new wave of economic development is taking shape, replacing the broken, low road model of Starbucks, Stadia, and Stealing Business.

It can be found in grand, economy shaping gestures: an Applied Sciences District in NYC, an Infrastructure Bank in Chicago, a metro encompassing transit system in Denver

It can also be discovered in smart structural interventions: creative technology software in Detroit to match interns to companies, a new intermediary in northeast Ohio to help small and medium-sized manufacturing firms retool their factory plants, a new facility in Seattle to test and verify new energy-efficient building technologies.

What unites these disparate efforts are a general set of principles that are relevant for Buffalo in setting priorities for investing the $1 billion.

Intentionality and purpose. After decades of pursuing fanciful illusions (becoming the next Silicon Valley) or engaging in copy cat strategies, metros are deliberately building on their special assets, attributes and advantages using business planning techniques honed in the private sector.

The ecosystem and the enterprise. These efforts do not just focus on the one transaction, attracting the one firm. They focus on building, structures, institutions, and platforms to give firms, dozens of firms, what they need: talent, capital, market intelligence, strategic advice, branding, and marketing.

Collaborate to compete. What also unites these efforts is collaboration across sectors, disciplines, jurisdictions, artificial political borders, and, yes, even political parties. As Colorado Governor John Hickenlooper likes to say “collaboration is the new competition.” Neighboring cities and metros, long divided by petty differences, now realize they need to come together to engage forcibly in the global market, with and against cities and metros five or ten times their size.

With this context in mind, I’d like to now turn to the second part of my presentation and discuss our findings on Buffalo’s general economic and social performance, and particular assets and advantages.

The initial findings here will not be a surprise to anyone in this room.

Frankly, the last 30 years have been a brutal period for the Buffalo region. In areas of unemployment, population, and GDP growth, Buffalo’s economy has lagged well behind the growth rates for the United States as a whole.

That’s a general top line observation. The most important insight has been the radical decline in the traded sectors of the Buffalo economy.

Between 1980 and 2010, Buffalo’s traded sector contracted by 30 percent, while its non-traded sector grew by 32 percent.

We all know the difference between the traded and non-traded sectors of the economy.

The tradable sector consists of goods and services that are produced in one area and consumed in another, including manufactured products, business and technical services, and energy sources.

By contrast, the non-tradable sector consists of goods and services that must be produced and consumed within the same local or regional economy, including sectors like retail, health care, government, construction, hotels, and restaurants.

Additionally, Buffalo has experienced significant sprawl even while its population has only slightly grown. Between 1950 and 2000, the Buffalo metro’s population grew by only 4.2 percent, but the developed land area has grown by an astounding 209 percent.

It is frankly difficult to understand and impossible to defend sprawl without growth. You are dissipating your energies, increasing your fiscal costs, and failing to realize the tangible benefits of density. How a place grows physically affects how you grow economically.

Buffalo’s lagging economic growth has been accompanied by poor social outcomes. In the last decade, Buffalo’s poverty rate has grown faster than the U.S., and its median household income is lower than the U.S. average.

The poverty and employment disparities are even greater when you look at them by race. In a span of 40 years, the employment rate among African-American males in Buffalo fell by 23.6 percentage points, leaving Buffalo with the second worst employment rate among African American males in large metro areas in 2010.

Despite these market challenges, the Buffalo-Niagara Falls region has real opportunities in the next economy which have not been fully leveraged.

Buffalo’s economy is rebounding from the Great Recession, and has had the third best overall performance in the recession and recovery among the top 100 metros in the country, which is measured on performance of indicators such as employment, GDP growth, and housing foreclosures.

Buffalo’s economic productivity growth between 2000 and 2011 was higher than the U.S., and its unemployment rate remains better than the overall unemployment rate for the United States.

In terms of innovation, Buffalo has particular traction around research and development and production.

SUNY Buffalo is a research and development powerhouse, receiving $348 million in public R&D in 2009 — trailing Cleveland, but much higher than other peer metros like Syracuse and Worcester. The majority of UB’s R&D expenditures are in life sciences, while engineering comprises another 17.3 percent.

In manufacturing itself, the region has 1,300 firms with 50,000 workers with concentration in several advanced industry clusters.

So Buffalo is an innovation hub. But what we heard time and time again, is that the region does not commercialize the ideas you generate nor scale the innovation through entrepreneurial start-ups, perhaps due to capital deficiencies, perhaps due to the lack of managerial talent.

On low carbon, Buffalo performs well, 16th among the top 100 metros on its carbon footprint. In 2005, the average resident in metropolitan Buffalo emitted less carbon from highway transportation and residential energy than the top 100 and U.S. averages. And your per capita footprint has decreased while the average per capita footprint of the 100 largest metro areas and of the nation has increased.

You also have the potential to be a clean economy hub, given concentration of jobs, intensity of jobs and presence in sectors like waste-to-energy, hydropower, and geothermal.

So Buffalo is low carbon on key indicators. But you haven’t leveraged your position particularly well and your green occupations are not as value add as they could be.

On exports, Greater Buffalo also punches above its weight, ranking 46th out of the top 100 metros by exporting $6.4 billion worth of goods and services in 2010.

Buffalo’s largest export industries are also its largest clusters. In 2010, Buffalos top 5 export sectors were: chemicals, machinery, business services, financial services, and royalties.

Buffalo’s trade with Canada is critical, given its close proximity. In 2010, Buffalo’s exports to Canada accounted for 17.4 percent of its total exports, greater than the shares for upstate peers like Rochester, Albany, and Syracuse.

In fact, you can see Canada from Buffalo! And what you are seeing is the Golden Horseshoe, North America’s fastest growing global metropolis.

Like many metro areas in the U.S., however, you lack a full operational and integrated strategic partnership with your most significant trading partner, underperforming other border communities, leaving billions off the table.

Finally, on opportunity, the Buffalo region benefits from a small but relatively high skilled set of immigrants. Buffalo fares significantly better than the top 100 metro average, but trails peers like Worcester, Syracuse, and Cleveland.

The Buffalo region also has a high—and relatively fast-growing—share of mid skilled workers.

But don’t get complacent. In 10 years, one-fifth of Buffalo’s industrial workforce will retire.At the same time, UB and other colleges and universities in the area graduate 411 production workers and 854 engineers each year, many of whom leave the area on the notion that there are “no jobs.”

It’s time to align skills with jobs.

Finally, the place itself.

Your city has many critical physical assets for economic growth—including along the waterfront, the Central Business District, the Larkin District, the Buffalo-Niagara Medical Campus, Buffalo State, Canisius College, Erie Community College, the Buffalo-Niagara Airport, and, of course, the University of Buffalo.

And you have a legacy of historic buildings, industrial corridors and world renowned architecture and urban amenities that other communities would die for: Frank Lloyd Wright’s Martin House, the Olmsted parks, the H.H. Richardson Complex, the Buffalo Belt Line, iconic industrial facilities, and, of course, the Niagara Falls.

And, last but not least, you have SPoT, literally my favorite community friendly coffee house in the United States.

Given these very real assets, I’d like to identify a series of possible goals for the Buffalo Billion and beyond that build a next economy and then show the cutting edge of practice from elsewhere in NY, the U.S., and abroad that might be brought to bear here.

Let’s start with innovation, the historic catalyst for economic growth and productivity.

The goal here is not hard to articulate: Buffalo should accelerate innovation, commercialization and production in advanced industry sectors of the economy.

We have named your assets.

You continue to have a manufacturing presence and an enviable location for production.

You are innovating on networked health technology in some very interesting ways.

You have ample research in life sciences, though that research has not been a full platform for firm creation and job growth.

You have a Buffalo Niagara Medical Campus, which, if fully realized, could transform not only the health and life sciences cluster but the adjoining neighborhoods as well.

As the Buffalo Billion process goes forward, capturing the full potential of each of these innovation opportunities—for firms, for workers, for the city—needs to be fully explored.

For now, it is worth examining the best practices in advanced manufacturing and innovation districts.

On manufacturing, you don’t need to look far.

SUNY Albany’s Nanotech Complex is a prime example of next generation, public-private support for advanced manufacturing.

In the last 15 years, this complex has grown into a $14 billion, 800,000 square foot nanotechnology research and development center. In the past decade, New York State has provided nearly $1 billion in financial support, and has partnered with over 300 corporations. It provides strategic support through technology acceleration, business incubation, and pilot prototyping for on-site corporate partners, which include IBM, Intel, GlobalFoundaries, and Samsung.

Today, there are more than 2,600 semiconductor-related research and development jobs on the site, and the emerging nanotech cluster in the Albany region played a role in attracting a recent $4.6 billion investment in a research facility from GlobalFoundaries in nearby Saratoga.

The Nanotech Complex reveals how technological innovation can be boosted in the private sector through smart public sector supply of shared infrastructure and equipment.

On low carbon, Buffalo has an unmatched proximity to one of the world’s greatest sources of clean, cheap hydro power.

This enables you, almost alone among U.S. metros, to have a distinctive goal: to be a global hub of innovative clean economy firms.

One of the best examples of a sustainable, low carbon metropolis in the world is Copenhagen, Denmark. The metropolis is 1.1 million in size by the way, exactly the scale of Buffalo.

Copenhagen is a beacon of sustainable development. An incredible 36 percent of all commuting trips to work or school are made by bike, and another 32 percent of city residents either walk or utilize the region’s highly-efficient public transportation network of buses and trains.

This spatial efficiency has obvious fiscal and health effects. Yet the big effect from sustainable development may be indirect and global. Copenhagen’s clean sector has been a critical contributor to the region’s economy in the past decade, with green exports outpacing all other sectors by growing at an astounding 77 percent.

Now the metropolis plans to go further, planning to become a carbon-neutral city by 2025. This is a market proposition as much as an environmental imperative. The city estimates that an additional investment of $453 million in U.S. dollars would leverage another $3.4 billion in private resources, and create 35,000 new jobs by 2025.

In some respects, your position on exports mimics your position on low carbon. Location, location, location. Buffalo’s proximity to our nation’s largest trading partner is an asset that has barely been tapped.

Our goal: Buffalo exploits its unique, bi-national position.

So how to accomplish this?

A best practice in the area of establishing global linkages is the ChinaSF initiative in San Francisco. Launched in 2008, ChinaSF’s goal is to support increased business exchange between China and the Bay Area for the region’s largest sectors, through providing services to Chinese companies seeking to establish offices in SF, helping Bay Area companies looking to expand overseas, and matching up overseas organizations to reduce transaction costs.

Thus far, ChinaSF has established three offices that offer bilingual services, and it has successfully recruited 15 Chinese firms to establish new offices in the Bay Area.

There are models to replicate and emulate for training and retaining the next generation industrial workforce.

A great model for educating students with skills to compete for jobs in the next economy is the Austin Polytechnical Academy on Chicago’s West Side. Founded in 2007 by the Chicago Manufacturing Renaissance Council, the school’s student body is 98 percent African American, and a supermajority of entering students have 3rd grade reading levels and 5th grade math levels. Austin’s curriculum focuses on careers in all aspects of the manufacturing industry, from skilled production and engineering to management and company ownership, plus related sectors such as intellectual property law.

The school has partnered with 65 local firms, who provide students with mentoring, field trips, and internship and job opportunities.

The school boasts a $100,000 state of the art manufacturing technology center, a high-tech facility for both students and adults, and it is the only Illinois high school that has received an accreditation from the National Institute for Metalworking Skills.

A best practice on tackling Buffalo’s talent retention challenge is an initiative called “Intern in Michigan.” Created in 2007, this program connects students and employers through an online matching system that forges connections based on specific job requirements, individual interests, and the skills of the candidates.

Since its inception, 60,548 matches and introductions have been made, more than 850 Michigan employers have registered for the system, and more than 10,500 students from nearly 500 schools, colleges, and universities worldwide are registered on Intern in Michigan.

Last goal: To reshape an economy you need to remake place and fully link physical and economic transformation.

It is obvious that realizing the full potential of the Buffalo Niagara Medical Campus is a major opportunity for the city and metropolis.

One highly relevant best practice for Buffalo is the East Baltimore redevelopment underway around the Johns Hopkins University Medical Center.

In 2002, Johns Hopkins University, the City of Baltimore, the State of Maryland, and other key partners devised a $1.8 billion plan to redevelop 88 acres of East Baltimore just north of the Johns Hopkins Hospital to include new retail, office and housing space, as well as a biotechnology park that would be linked to commercialization of research coming out of Johns Hopkins Hospital.

When finished, the area will have 1,500 to 2,000 new housing units, as well as an additional 1.7 million square feet of commercial, laboratory and retail space.

Conclusion

Let me conclude with these thoughts.

One billion dollars is a lot of money, and it should be invested with care and discipline, through a process that is evidence-driven, performance-measured, and transparent.

If you do this well, you will, in the near term, leverage private sector investment and create jobs.

But this is not just about the immediate; this is about the long-term.

Ideally, the investments today will set a platform for long-term growth; it will be the gift that keeps on giving.

Ideally, the strategies you identify will not just draw down the Buffalo Billion, but drive billions more in public and private sector investments.

So invest for now, but in a way that transforms, leverages, and accelerates the next.

So invest for now, but in a way that enables you to be a 21st century version of yourself.

Authors

Thank you, [University of Buffalo president] Satish [Tripathi], for that introduction and for the invitation to speak at UB Partners Day.

As many of you know, Governor Cuomo made an unprecedented $1 billion commitment to Buffalo in his annual State of the State address on January 4, saying: “Buffalo has the workforce, the talent, the resources, and the will to succeed. We believe in Buffalo. And we’ll put our money where our mouth is.”

The governor’s commitment to Buffalo, and last year’s award to Western New York following the regional economic development competition, illustrates new thinking in this state. Economic development, long dictated top down by Albany and its myriad bureaucracies, is now being driven bottom-up by the cities and the metropolitan areas and the regions where the economy actually concentrates and agglomerates.

A clear signal is being sent to the market—consumers, companies, investors—New York state is “open for business” and Buffalo is “back in business.”

To this end, Governor Cuomo asked me and my colleagues at Brookings to work with a group of local institutions to assess your market position, identify your distinctive assets and advantages, and consider your investment options in light of the best innovations underway in the U.S. and around the world.

For the past few months, it has been a pleasure to work closely with a remarkable set of partners—the UB Regional Institute and Buffalo-Niagara Enterprise—and the Western New York Regional Council and Empire State Development. I want to particularly thank Howard Zemsky, Laura Fulton, Bob Shipley, and Christina Orsi for their invaluable management, research, and guidance throughout this process.

Over the past three months, our institutions have held dozens of meetings to hear from the experts—the men and women who actually own firms, take risks, finance transactions, train workers and build wealth—in other words, co-produce the economy in this city and metropolis.

This is the first step in a longer process that is intended to yield strategic investments that are likely to have high return, create jobs in the near term, and retool your economy for the long haul.

Today I want to give a status report to the community on progress to date and next steps in the process.

My presentation will be divided into three parts:

First, I want to describe the economic vision and practice we are using to guide this investment and our recommendations. In the aftermath of the Great Recession, the U.S. economy is undergoing a slow, painful transition toward an economy fueled by innovation, powered by low carbon, driven by exports, rich with opportunity and led by cities and metropolitan areas. The shift to the next economy is being matched by a new kind of metropolitan economic development, building on the distinctive assets of disparate places and geared to strengthening an ecosystem as much as engaging in one-off transactions with individual firms.

Second, I want to unveil our initial findings about the state of your economy. After decades of depopulation, deindustrialization, and decentralization, Buffalo faces challenges that are well known and well studied. Yet we have found some remarkable assets “hidden in plain sight,” ranging from advanced research & development at your universities to the disproportionate presence of advanced manufacturing and clean economy firms to your enviable location on the border with America’s largest trading partner to the promising development underway in the downtown and nearby to the historic legacy of world class architecture and landscape.

Bottom line: There is a base to build on here that is special and holds real market potential.

Finally, I want to lay out a series of goals for the “Buffalo Billion” that build on your distinctive assets and advantages and then provide examples of best innovations in the U.S. and abroad that could be tailored and adapted to this community. There is absolutely no reason to reinvent the wheel. Communities similarly situated to Buffalo in the U.S., Europe, and elsewhere have successfully retooled their economies and remade their places to great benefit.

You can, and you will, do the same.

So let me start with the broader context for this effort.

At the most basic level, the U.S. needs more jobs—11.3 million by one estimate—to recover the jobs lost during the downturn and keep pace with population growth and labor market dynamics.

There is no easy fix to achieve these twin goals. But one thing is clear: We will need to purposefully restructure our economy from one focused inward and characterized by excessive consumption and debt to one globally engaged and driven by production and innovation.

Or, as I have said before, we must move to a “next economy” that is fueled by innovation, powered by low carbon, driven by exports, and rich with opportunity. Let’s unpack that a little, so we both understand the broader growth model and the special moment we find ourselves in.

The vision begins with innovation—to spur growth through the interplay of invention, commercialization, manufacturing, and skilled workers.

Over the past two decades, the discussion of innovation in the U.S. narrowed, positioning it as something only conducted in the ivory tower or among exceptional entrepreneurs like Steve Jobs.

We forgot something early generations intuitively understood: the inextricable link and virtuous cycle between innovation and manufacturing.

While only about 9 percent of all U.S. jobs are in manufacturing, about 35 percent of all engineers work in manufacturing.

Although the manufacturing sector comprises only 11 percent of GDP, manufacturers account for 68 percent of the spending on R&D that is performed by companies in the United States and are responsible for 90 percent of all patents in the United States.

Going forward, we will innovate less if we do not produce more. We must make things again.

The discussion of innovation naturally leads to the notion that the next economy should be powered by “low carbon” and advanced energy.

Everything is changing.

The energy we use, the infrastructure we build, the homes we live in and the office and retail buildings we frequent, and the products we buy are all shifting from modes that are outdated to systems that are smarter, faster, more technologically enabled and more environmentally sound.

The U.S., on the other hand, treats the clean economy as a political and ideological football, undermining our potential to position the U.S. at the vanguard of the next innovation-led industrial revolution.

An economy that innovates, particularly around clean energy and products, is an economy that can take advantage of rising global demand for quality U.S. products and services.

That is more important than ever. The locus of economic power in the world is shifting.

Together, Brazil, India and China—the BICs—accounted for about a fifth of the global GDP in 2009, surpassing the United States for the first time. By 2015, the BIC share will grow to more than 25 percent.

The top 30 metro performers today are almost exclusively located in Asia and Latin America. The 30 worst metro performers are nearly all located in Europe, the United States and earthquake-ravaged Japan.

This is not a rocket science. The U.S. needs to reorient our economy to take advantage of this new demand. In 2010, exports made up only 13 percent of the GDP of the U.S. compared to 30 percent in China, 29 percent in Canada, and higher levels in India, Japan, and the entire EU.

Finally, the next economy should be opportunity rich, so that working families can earn wages sufficient to attain a middle class life.

Building the next economy is essential here: research shows that firms in export-intense industries, for example, pay workers more and are more likely to provide health and retirement benefits.

Yet building the next economy will require the United States to get real smart, real fast.

Over the next several decades, African Americans and Hispanics will grow from about 25 percent to nearly 40 percent of the working-age population.

Yet the U.S. and this region have sharp racial and ethnic disparities on education. Upgrading the education and skills of the next, more diverse American workforce is a competitive imperative.

This macro growth model is a sharp departure from the one that dominated American thinking pre-recession—one that extolled consumption and excessive financial risk and raised the absurd prospect that the U.S. would somehow become a post industrial economy.

Labor costs are now rising in China, and concerns persist about the protection of intellectual property.

Energy can be cheaper here, and more reliable.

The tsunami in Japan, the world's main supplier of many high tech components, revealed the fragility of far flung supply chains for many U.S. companies.

And, the best news, manufacturing is coming back, fueling 38 percent of the recovery.

We must innovate again. We must make things again. We must embrace clean and green as an environmental imperative and market proposition. We must embrace the world.

This macro model comes to ground in the major cities and metropolitan areas that shape, determine, and deliver the economy.

The real heart of the American economy consists of 100 metropolitan areas that after decades of growth take up only 12 percent of our land mass, but harbor 2/3 of our population, generate 75 percent of our gross domestic product and, on every single indicator that matters—innovation, human capital, infrastructure—punch above their weight at dizzying levels.

This is the power of concentration and agglomeration: the network effect of firms, universities, institutions fertilizing ideas, sharing workers, extending innovation, enhancing competitiveness, and catalyzing growth.

Bottom line: There is no national American economy. Rather, the U.S. economy is a network of powerful metropolitan economies.

One last contextual piece that we have considered during this process.

Across the nation, in the absence of federal leadership, cities and metros are taking control of their own destinies, becoming deliberate and intentional about their economic growth, moving beyond affecting their form to shaping their function.

A new wave of economic development is taking shape, replacing the broken, low road model of Starbucks, Stadia, and Stealing Business.

It can be found in grand, economy shaping gestures: an Applied Sciences District in NYC, an Infrastructure Bank in Chicago, a metro encompassing transit system in Denver

It can also be discovered in smart structural interventions: creative technology software in Detroit to match interns to companies, a new intermediary in northeast Ohio to help small and medium-sized manufacturing firms retool their factory plants, a new facility in Seattle to test and verify new energy-efficient building technologies.

What unites these disparate efforts are a general set of principles that are relevant for Buffalo in setting priorities for investing the $1 billion.

Intentionality and purpose. After decades of pursuing fanciful illusions (becoming the next Silicon Valley) or engaging in copy cat strategies, metros are deliberately building on their special assets, attributes and advantages using business planning techniques honed in the private sector.

The ecosystem and the enterprise. These efforts do not just focus on the one transaction, attracting the one firm. They focus on building, structures, institutions, and platforms to give firms, dozens of firms, what they need: talent, capital, market intelligence, strategic advice, branding, and marketing.

Collaborate to compete. What also unites these efforts is collaboration across sectors, disciplines, jurisdictions, artificial political borders, and, yes, even political parties. As Colorado Governor John Hickenlooper likes to say “collaboration is the new competition.” Neighboring cities and metros, long divided by petty differences, now realize they need to come together to engage forcibly in the global market, with and against cities and metros five or ten times their size.

With this context in mind, I’d like to now turn to the second part of my presentation and discuss our findings on Buffalo’s general economic and social performance, and particular assets and advantages.

The initial findings here will not be a surprise to anyone in this room.

Frankly, the last 30 years have been a brutal period for the Buffalo region. In areas of unemployment, population, and GDP growth, Buffalo’s economy has lagged well behind the growth rates for the United States as a whole.

That’s a general top line observation. The most important insight has been the radical decline in the traded sectors of the Buffalo economy.

Between 1980 and 2010, Buffalo’s traded sector contracted by 30 percent, while its non-traded sector grew by 32 percent.

We all know the difference between the traded and non-traded sectors of the economy.

The tradable sector consists of goods and services that are produced in one area and consumed in another, including manufactured products, business and technical services, and energy sources.

By contrast, the non-tradable sector consists of goods and services that must be produced and consumed within the same local or regional economy, including sectors like retail, health care, government, construction, hotels, and restaurants.

Additionally, Buffalo has experienced significant sprawl even while its population has only slightly grown. Between 1950 and 2000, the Buffalo metro’s population grew by only 4.2 percent, but the developed land area has grown by an astounding 209 percent.

It is frankly difficult to understand and impossible to defend sprawl without growth. You are dissipating your energies, increasing your fiscal costs, and failing to realize the tangible benefits of density. How a place grows physically affects how you grow economically.

Buffalo’s lagging economic growth has been accompanied by poor social outcomes. In the last decade, Buffalo’s poverty rate has grown faster than the U.S., and its median household income is lower than the U.S. average.

The poverty and employment disparities are even greater when you look at them by race. In a span of 40 years, the employment rate among African-American males in Buffalo fell by 23.6 percentage points, leaving Buffalo with the second worst employment rate among African American males in large metro areas in 2010.

Despite these market challenges, the Buffalo-Niagara Falls region has real opportunities in the next economy which have not been fully leveraged.

Buffalo’s economy is rebounding from the Great Recession, and has had the third best overall performance in the recession and recovery among the top 100 metros in the country, which is measured on performance of indicators such as employment, GDP growth, and housing foreclosures.

Buffalo’s economic productivity growth between 2000 and 2011 was higher than the U.S., and its unemployment rate remains better than the overall unemployment rate for the United States.

In terms of innovation, Buffalo has particular traction around research and development and production.

SUNY Buffalo is a research and development powerhouse, receiving $348 million in public R&D in 2009 — trailing Cleveland, but much higher than other peer metros like Syracuse and Worcester. The majority of UB’s R&D expenditures are in life sciences, while engineering comprises another 17.3 percent.

In manufacturing itself, the region has 1,300 firms with 50,000 workers with concentration in several advanced industry clusters.

So Buffalo is an innovation hub. But what we heard time and time again, is that the region does not commercialize the ideas you generate nor scale the innovation through entrepreneurial start-ups, perhaps due to capital deficiencies, perhaps due to the lack of managerial talent.

On low carbon, Buffalo performs well, 16th among the top 100 metros on its carbon footprint. In 2005, the average resident in metropolitan Buffalo emitted less carbon from highway transportation and residential energy than the top 100 and U.S. averages. And your per capita footprint has decreased while the average per capita footprint of the 100 largest metro areas and of the nation has increased.

You also have the potential to be a clean economy hub, given concentration of jobs, intensity of jobs and presence in sectors like waste-to-energy, hydropower, and geothermal.

So Buffalo is low carbon on key indicators. But you haven’t leveraged your position particularly well and your green occupations are not as value add as they could be.

On exports, Greater Buffalo also punches above its weight, ranking 46th out of the top 100 metros by exporting $6.4 billion worth of goods and services in 2010.

Buffalo’s largest export industries are also its largest clusters. In 2010, Buffalos top 5 export sectors were: chemicals, machinery, business services, financial services, and royalties.

Buffalo’s trade with Canada is critical, given its close proximity. In 2010, Buffalo’s exports to Canada accounted for 17.4 percent of its total exports, greater than the shares for upstate peers like Rochester, Albany, and Syracuse.

In fact, you can see Canada from Buffalo! And what you are seeing is the Golden Horseshoe, North America’s fastest growing global metropolis.

Like many metro areas in the U.S., however, you lack a full operational and integrated strategic partnership with your most significant trading partner, underperforming other border communities, leaving billions off the table.

Finally, on opportunity, the Buffalo region benefits from a small but relatively high skilled set of immigrants. Buffalo fares significantly better than the top 100 metro average, but trails peers like Worcester, Syracuse, and Cleveland.

The Buffalo region also has a high—and relatively fast-growing—share of mid skilled workers.

But don’t get complacent. In 10 years, one-fifth of Buffalo’s industrial workforce will retire.At the same time, UB and other colleges and universities in the area graduate 411 production workers and 854 engineers each year, many of whom leave the area on the notion that there are “no jobs.”

It’s time to align skills with jobs.

Finally, the place itself.

Your city has many critical physical assets for economic growth—including along the waterfront, the Central Business District, the Larkin District, the Buffalo-Niagara Medical Campus, Buffalo State, Canisius College, Erie Community College, the Buffalo-Niagara Airport, and, of course, the University of Buffalo.

And you have a legacy of historic buildings, industrial corridors and world renowned architecture and urban amenities that other communities would die for: Frank Lloyd Wright’s Martin House, the Olmsted parks, the H.H. Richardson Complex, the Buffalo Belt Line, iconic industrial facilities, and, of course, the Niagara Falls.

And, last but not least, you have SPoT, literally my favorite community friendly coffee house in the United States.

Given these very real assets, I’d like to identify a series of possible goals for the Buffalo Billion and beyond that build a next economy and then show the cutting edge of practice from elsewhere in NY, the U.S., and abroad that might be brought to bear here.

Let’s start with innovation, the historic catalyst for economic growth and productivity.

The goal here is not hard to articulate: Buffalo should accelerate innovation, commercialization and production in advanced industry sectors of the economy.

We have named your assets.

You continue to have a manufacturing presence and an enviable location for production.

You are innovating on networked health technology in some very interesting ways.

You have ample research in life sciences, though that research has not been a full platform for firm creation and job growth.

You have a Buffalo Niagara Medical Campus, which, if fully realized, could transform not only the health and life sciences cluster but the adjoining neighborhoods as well.

As the Buffalo Billion process goes forward, capturing the full potential of each of these innovation opportunities—for firms, for workers, for the city—needs to be fully explored.

For now, it is worth examining the best practices in advanced manufacturing and innovation districts.

On manufacturing, you don’t need to look far.

SUNY Albany’s Nanotech Complex is a prime example of next generation, public-private support for advanced manufacturing.

In the last 15 years, this complex has grown into a $14 billion, 800,000 square foot nanotechnology research and development center. In the past decade, New York State has provided nearly $1 billion in financial support, and has partnered with over 300 corporations. It provides strategic support through technology acceleration, business incubation, and pilot prototyping for on-site corporate partners, which include IBM, Intel, GlobalFoundaries, and Samsung.

Today, there are more than 2,600 semiconductor-related research and development jobs on the site, and the emerging nanotech cluster in the Albany region played a role in attracting a recent $4.6 billion investment in a research facility from GlobalFoundaries in nearby Saratoga.

The Nanotech Complex reveals how technological innovation can be boosted in the private sector through smart public sector supply of shared infrastructure and equipment.

On low carbon, Buffalo has an unmatched proximity to one of the world’s greatest sources of clean, cheap hydro power.

This enables you, almost alone among U.S. metros, to have a distinctive goal: to be a global hub of innovative clean economy firms.

One of the best examples of a sustainable, low carbon metropolis in the world is Copenhagen, Denmark. The metropolis is 1.1 million in size by the way, exactly the scale of Buffalo.

Copenhagen is a beacon of sustainable development. An incredible 36 percent of all commuting trips to work or school are made by bike, and another 32 percent of city residents either walk or utilize the region’s highly-efficient public transportation network of buses and trains.

This spatial efficiency has obvious fiscal and health effects. Yet the big effect from sustainable development may be indirect and global. Copenhagen’s clean sector has been a critical contributor to the region’s economy in the past decade, with green exports outpacing all other sectors by growing at an astounding 77 percent.

Now the metropolis plans to go further, planning to become a carbon-neutral city by 2025. This is a market proposition as much as an environmental imperative. The city estimates that an additional investment of $453 million in U.S. dollars would leverage another $3.4 billion in private resources, and create 35,000 new jobs by 2025.

In some respects, your position on exports mimics your position on low carbon. Location, location, location. Buffalo’s proximity to our nation’s largest trading partner is an asset that has barely been tapped.

Our goal: Buffalo exploits its unique, bi-national position.

So how to accomplish this?

A best practice in the area of establishing global linkages is the ChinaSF initiative in San Francisco. Launched in 2008, ChinaSF’s goal is to support increased business exchange between China and the Bay Area for the region’s largest sectors, through providing services to Chinese companies seeking to establish offices in SF, helping Bay Area companies looking to expand overseas, and matching up overseas organizations to reduce transaction costs.

Thus far, ChinaSF has established three offices that offer bilingual services, and it has successfully recruited 15 Chinese firms to establish new offices in the Bay Area.

There are models to replicate and emulate for training and retaining the next generation industrial workforce.

A great model for educating students with skills to compete for jobs in the next economy is the Austin Polytechnical Academy on Chicago’s West Side. Founded in 2007 by the Chicago Manufacturing Renaissance Council, the school’s student body is 98 percent African American, and a supermajority of entering students have 3rd grade reading levels and 5th grade math levels. Austin’s curriculum focuses on careers in all aspects of the manufacturing industry, from skilled production and engineering to management and company ownership, plus related sectors such as intellectual property law.

The school has partnered with 65 local firms, who provide students with mentoring, field trips, and internship and job opportunities.

The school boasts a $100,000 state of the art manufacturing technology center, a high-tech facility for both students and adults, and it is the only Illinois high school that has received an accreditation from the National Institute for Metalworking Skills.

A best practice on tackling Buffalo’s talent retention challenge is an initiative called “Intern in Michigan.” Created in 2007, this program connects students and employers through an online matching system that forges connections based on specific job requirements, individual interests, and the skills of the candidates.

Since its inception, 60,548 matches and introductions have been made, more than 850 Michigan employers have registered for the system, and more than 10,500 students from nearly 500 schools, colleges, and universities worldwide are registered on Intern in Michigan.

Last goal: To reshape an economy you need to remake place and fully link physical and economic transformation.

It is obvious that realizing the full potential of the Buffalo Niagara Medical Campus is a major opportunity for the city and metropolis.

One highly relevant best practice for Buffalo is the East Baltimore redevelopment underway around the Johns Hopkins University Medical Center.

In 2002, Johns Hopkins University, the City of Baltimore, the State of Maryland, and other key partners devised a $1.8 billion plan to redevelop 88 acres of East Baltimore just north of the Johns Hopkins Hospital to include new retail, office and housing space, as well as a biotechnology park that would be linked to commercialization of research coming out of Johns Hopkins Hospital.

When finished, the area will have 1,500 to 2,000 new housing units, as well as an additional 1.7 million square feet of commercial, laboratory and retail space.

Conclusion

Let me conclude with these thoughts.

One billion dollars is a lot of money, and it should be invested with care and discipline, through a process that is evidence-driven, performance-measured, and transparent.

If you do this well, you will, in the near term, leverage private sector investment and create jobs.

But this is not just about the immediate; this is about the long-term.

Ideally, the investments today will set a platform for long-term growth; it will be the gift that keeps on giving.

Ideally, the strategies you identify will not just draw down the Buffalo Billion, but drive billions more in public and private sector investments.

So invest for now, but in a way that transforms, leverages, and accelerates the next.

So invest for now, but in a way that enables you to be a 21st century version of yourself.

The collapse of the consumption-driven, domestic-focused growth model is giving rise to new thinking about a next economy that is fuelled by innovation, powered by low-carbon processes and products, driven by exports and rich with opportunity. These aspects of the next economy require metropolitan leaders to cultivate peer networks for improving collaboration and setting platforms for sustainable economic growth.

In an essay for Next American City, Bruce Katz and Jennifer Bradley highlight ways metropolitan areas can effectively share expertise. They call for metro areas to use the proper metrics to assess their unique competitive assets, expand metropolitan relationships beyond U.S. borders, and provide visionary leadership to set foundations for long-term prosperity.

The authors also encourage leaders to engage directly among each other and with constituents by using technology and social media to bolster networks.

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The collapse of the consumption-driven, domestic-focused growth model is giving rise to new thinking about a next economy that is fuelled by innovation, powered by low-carbon processes and products, driven by exports and rich with opportunity. These aspects of the next economy require metropolitan leaders to cultivate peer networks for improving collaboration and setting platforms for sustainable economic growth.

In an essay for Next American City, Bruce Katz and Jennifer Bradley highlight ways metropolitan areas can effectively share expertise. They call for metro areas to use the proper metrics to assess their unique competitive assets, expand metropolitan relationships beyond U.S. borders, and provide visionary leadership to set foundations for long-term prosperity.

The authors also encourage leaders to engage directly among each other and with constituents by using technology and social media to bolster networks.

Editor’s Note: During the opening breakfast event for Los Angeles’ 86th Annual World Trade Week, Amy Liu delivered a presentation and remarks describing how the region can build on its local assets to boost exports.

It is a real honor to be asked to help you kick off your 86th Annual World Trade Week. After 86 years, it is not a surprise that this is a region that is quite globally aware and globally engaged, thanks to the leadership of the L.A. Area Chamber, the L.A. and Long Beach ports, the city, and many, many others.

Recent speakers have come before you reinforcing the importance of the trade economy and the critical need to modernize the trade infrastructure here in the region and the state, building a truly effective freight/logistics and supply chain management system. That is no doubt imperative if we are to keep the L.A. region a trade hub of choice in an increasingly competitive global environment.

"The winners in the next economy will be those who strengthen global assets and tap new sources of aggregate demand."

This morning, I want to build on those messages. First, it is important to recognize that it is metro areas that are the true economic units of the global economy so they must act with intention to maximize the opportunities presented by expanding markets abroad. Yet, to act regionally, we need strong civic infrastructures — of business, political, civic, university, nonprofit leaders who must work effectively together to leverage and integrate all of the assets that will help the L.A. region prosper. The good news is that the new Los Angeles Regional Export Council and its regional export plan embody that kind of proactive, cross-sector partnership that will position this region well for success. And Brookings is pleased to have been advisor of that effort.

It is often said that collaboration is an unnatural act. Yet, those regional export partnerships and initiatives must succeed and not just be plans on paper. There are new rules of economic growth post-recession. To be clear: the regions that adapt well … with focus, intention and collective action … will be those who will excel in the new global economic order.

Times have changed. The U.S. economy is undergoing a major economic restructuring which demands a structural response. The Great Recession was not the same as its predecessors.The job loss this time was steeper, the impact deeper, and the recovery slower because this was a structural recession.

The core structural problem: Nearly all of the incremental job growth over the last two decades came from non-tradable sectors, such as real estate, retail, and government.This was the eye-popping stat issued by Nobel economist Michael Spence. In short, we stopped innovating and producing jobs in value-added industries that create wealth, grow local industries, and make our American marketplace distinct from our competitors.

The other big structural shift: Economic growth is increasingly taking place outside the U.S.

In 2010, the combined global GDP of the BIC nations surpassed that of the U.S. for the first time, making up one-fifth of the world economy. That shift is expected to accelerate in the coming years while the U.S. share of global GDP is forecasted to stay the same.

The rise of the BICs is also in part a reflection of the rise of global metros. Rapid industrialization has been matched by rapid urbanization. More than half of the world’s population now lives in cities, and that share is expected to grow to 60 percent in 2030 and 70 percent by 2050.

With rapid urbanization comes the rise of the global middle class which isdriving the growth of consumption. OECD predicts that, despite the recession, consumption is expected to rise from $21 trillion today to $31 trillion by 2020, mostly due to the growth in Asia and Latin America.

We view these trends as less a threat but a market opportunity.

Against this back drop, let me tell you what the data is telling us. The winners in the next economy will be those who strengthen global assets and tap new sources of aggregate demand.

The leaders in the next economy will innovate in manufacturing.While manufacturing has contracted as a share of the overall economy, it is becoming leaner and more advanced. Thus, manufacturing jobs are recovering faster than the economy as a whole, at 2.3 percent in the third quarter of last year compared to 1.4 percent nationally. The manufacturing sector has added about 350,000 jobs in the last two years.

For those who remain skeptical about U.S. competitive advantage in manufacturing, this is not the industry of yesterday. The U.S. is the third largest manufacturing exporter in the world because manufacturing remains a critical part of our innovation cycle.U.S. manufacturing employs 35 percent of all of our scientists and engineers, invests 68 percent of all R&D; and generates 90 percent of all patents.

Leaders will also need to innovate in services. In fact, services, such as business consulting, education, architecture and planning, are the fastest growing segment of our export economy, and the U.S. has a trade surplus in services.

Within the services sector, expenditures of foreign students in U.S. colleges is growing steadily. We now have more than 720,000 international students studying in the United States, led by those from China, India, and Korea. That sector represents $21.2 billion in U.S. service exports.

Leaders in the next economy will also invent and deploy clean economy goods and services.

Rapid urbanization worldwide has pushed up the global demand for environmentally friendly goods and services, such as energy efficient appliances and building technologies, smart grid, sustainable land use planning and infrastructure, and organic foods. We are meeting that demand. In fact the U.S. has a sizeable clean economy, representing 2.7 million jobs.

The upshot: U.S. clean economy products generated $54 billion in exports, two times more value per job than the typical U.S. export.

Additionally, the regions that prosper will be those that take advantage of global demand. The post-recession reality has made that more urgent.

According to our recent Global MetroMonitor, 90 percent of the fastest growing markets among the 200 largest world cities were located outside of the U.S., Western Europe, and earthquake-ravaged Japan.

In fact, there are more than 20 markets around the globe that did not experience this last recession or have already fully recovered— Shanghai, Shenzhen, Mumbai in Asia ... Istanbul in Europe … Santiago and Buenos Aires in Latin America.

Bottom line: If we are to grow, our firms must look outside of the U.S. and tap emerging markets and global consumption as a source of growth here at home.

And here is the evidence: Those firms who embraced international sales drove our economic recovery. Exports were responsible for 46 percent of US GDP growth between 2010 and 2011 …which is remarkable since exports make up only 13 percent of the GDP of the U.S. … compared to much higher shares in China, Canada, and the entire EU.

Going global pays off for small and mid-sized firms.Those who exported saw their revenues grow, by 37 percent, through 2009, compared to just 7 percent among non-exporters.

Selling globally simply makes good business sense.

Second, it will be metro areas like Los Angeles that will drive the transition to the next economy.

Metro areas are the engines of the global economy b/c they aggregate and integrate the very market assets that drive growth.Even though the 100 largest metro areas sit on just 12 percent of the nation’s land area, they dominate in innovation, by attracting 94 percent of the nation’s venture capital. They are the producers of our trade economy, generating 75 percent of all services exports. And they are the hubs of supply chains and goods movements, handling 82 percent of the nation’s air freight.

As a result of those assets, the 100 largest metro areas generate 75 percent of the nation’s GDP.

And metro areas generate the majority of export activities in 30 out 50 states.

Let’s take a quick aerial trip to this metro area and showcase the unique components of your trade economy, which is truly regional in nature.

You are the largest metro exporter in the country, with $80b in export sales, and exports make up a larger share of this economy at 11 percent than the typical metro area or even the nation as a whole.

Your export economy is more service oriented than the national average … driven by royalties, travel and tourism, and business and professional services.

That’s not surprising. Ask anyone what they think L.A. produces: Hollywood is the first thing that comes to mind. In 2010, royalties were a $12.4 billion export industry, powered by film and television.

Yet L.A. does not just make films, it makes things.Close to 60 percent of your exports comes from the manufacturing sector, and you have over 106,000 direct export manufacturing jobs.

In Torrance, southwest of downtown, we find Luminit,a small manufacturer of advanced lighting products that are used in a broad range of applications. Luminit’s production center houses some of the world’s most advanced equipment for R&D, engineering, and the manufacturing of optics. In the last two years, the firm’s exports have grown 68 percent.

Just to the south of Luminit is Pelican Products, a firm that produces high-performance protective cases and advanced portable lighting equipment used by law enforcement, defense, aerospace, and the entertainment industry. Exports make up 35 percent of Pelican’s total business, and the firm sells its products to over 100 countries. As with Luminit, Pelican has experienced significant export growth in the past few years, driven by strong demand in Europe and Asia.

Both Pelican and Luminit benefit from their partnership with USC’s Center for International Business Education and Research and UCLA. One works with CIBER to help determine where to locate distribution centers in Asia. And the other benefits from the Export Champions program, a collaboration also with the L.A. Area Chamber of Commerce, which deploys MBA students to small firms to help them integrate international sales and markets into their business plans.

Further, these universities are service exporters themselves, attracting nearly 39,000 international students who purchase their top notch educational programs.

USC and UCLA are joined by Mayor Antonio Villaraigosa at City Hall, the L.A. Area Chamber of Commerce, and others, such as the Ports of L.A. and Port of Long Beach, the Los Angeles World Airports and regional business associations in being part of a larger regional group—the Los Angeles Regional Export Council which was formed last November to bring greater coherence and focus in helping L.A. firms expand effectively in to global markets.

Finally, as you know well, the ports of Los Angeles and Long Beach play particularly critical roles in the movement of goods produced by firms like Pelican and Luminit to markets throughout the world, especially to Asia. Taken together, these two ports form the busiest complex in the Western Hemisphere, and the sixth busiest port complex in the world.

The L.A. story reveals why it is not just the city but the entire metro area that powers our economy: these hyper-linked networks of private firms, universities and public and nonprofit institutions rely on each other to fertilize ideas, extend innovation, enhance competitiveness, and collaborate to catalyze economic growth for the entire region. These actors also make up the civic infrastructure needed to make sure the economy doesn’t just grow by luck but with purpose and vision.

That leads me to my final point, given all these assets, this region is poised to lead in the global economy.

First, you are innovating locally. And you must not only because of increased competition abroad but because partisan gridlock in Washington and the fiscal straightjacket in Sacramento demand that you drive your own fortunes in this global economy.

This region is one of four metro areas in the country piloting some of the nation’s first metro export plans. Your leadership in this space, alongside Portland, Minneapolis-St. Paul and Central New York, will likely spawn copycatting among state, city, and regional leaders who are eager to better orient their economies for export growth. Further, this state, and federal trade-related agencies, like ITA, SBA, Ex-Im Bank, are all committed to better align their state and federal activities with this region’s ambitions.

To develop its plan, this region conducted a market assessment of its export position, using data analysis and surveys and interviews of companies.

Leaders here worked hard to set exporting goals and objectives, devise strategies to meet those goals, and establish metrics to gauge progress.

And lastly and noted before, this plan was prepared by a consortium of corporate, government, university and civic institutions who “collaborated to compete” globally.

What I like about these plans is that it exemplifies exactly why you can not double exports nationally from the top but instead from the bottom up. The L.A. region and each of the other metros set a goal of doubling exports in five years. But each is meeting that goal with very different strategies, built on their unique competitive advantages. There is no one size fits all approach to doubling exports.

This region has established a Los Angeles Regional Export Council. The council, to be formal and funded, will be held accountable for ensuring that existing efforts and new programs are coordinated, unified, and sustained in ways that will increase the number and volume of exporters in this region.

The focus will be helping export ready companies in 12 target industries, like aerospace and energy/green technologies, connect to priority markets like the Pacific Rim.

In short, this proactive effort to bring more companies into the trade economy is good for all parts of greater L.A., such as for both ports and area airports, so they are shipping not just any goods but more products made in L.A.

To take this metro innovation to scale, Mayor Villaraigosa, in his capacity as head of the U.S. Conference of Mayors,put out an Export Challenge to America’s cities and metros: “Design strategies that build from your special export strengths.”

Soon, other metro areas will be joining you in developing innovative approaches to trade.

But, as you know, as much as you innovate locally, the states and federal leaders matter to the success of your efforts. So, you must advocate nationally.

Local leaders in China, Germany, South Korea, Spain, Brazil, and Columbia are working in partnership with their regional and national governments to make transformative investments in world class ports, high speed rail, research and innovation.

We must do the same here at home.

So what does this region want in a state and federal partnership to make a regional export and trade strategy a success?

First, at the state level, it has been helpful to have a state partner in the governor’s new Office of Business and Economic Development. The governor announced the opening of a new California-China Trade and Investment Office, while in L.A. during the Chinese vice president’s visit earlier this year.

That global presence is critical. But the state can do more at a time when other states are aggressively ramping up their state export capacity. It can re-establish the California Export Finance Office to provide small exporting firms with short-term financing, a self-generating program with little cost to tax payers. It should commit long term funding to the critical CITD program, the Centers of International Trade and Development,which trains firms on exporting but currently on a financial lifeline. Or it can establish a competitive grant program for metro area, as done in other states, so regions like L.A. can implement their own trade strategies

At the federal level, one of the few bipartisan successes was the passage of the free trade agreements. Hopefully, for the remainder of the year, we will also pass the reauthorization of the Ex-Im Bank, and maybe a short term national transportation bill.

But when this election is over, this region should demand real action:

No matter who is president, there is a good chance that the federal government will streamline and reorganize federal trade agencies and services. And the business community is demanding it. Metros also need to play an enormous role.

President Obama, for example, has proposed consolidating six agencies in this federal apparatus involved in trade activities: the U.S. Department of Commerce’s core business and trade functions, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, and the Overseas Private Investment Corporation.

Yet consolidation would be a failure if it just moved agency boxes around in Washington D.C.

The key to success is to integrate activities on the ground. As I have heard Carlos urge often… local representatives of the federal export agencies must operate as a unified export team themselves– with one set of export objectives, one set of performance metrics, in alignment with a region’s ambitions and puts businesses first.

Finally, beyond innovating locally and advocating nationally, U.S. metros must network globally—creating and stewarding close working relationships with trading partners in both mature and rising nations.

Strong connections already exist:

Metros with concentrations in financial services, like New York, are forming tight, interlocking networks with similarly focused metros around the world.

Metros with concentrations in advanced manufacturing, like Detroit, are similarly linking with metros in both developed and rising nations.

And port metros like Los Angeles-Long Beach are making key connections with the world’s air, rail and sea hubs.

These networks obviously start with firms and ports that do business with each other.

But, over time, they must extend to supporting institutions— governments, universities, regional business groups—that provide support for companies at the leading edge of metropolitan economies.

The goal is to revive the way the global economy evolved before the rise of nation states when historical trade routes flowed through cities … like the 15th century Silk Road that connected Asian cities and silk, tea, spices, they produced to cities in Europe, Mediterranean and Africa.

* * *

In closing, I want to urge you to not rest on your rankings. You may be the largest exporter in the U.S., and the busiest port hub in the U.S., but the L.A. economy lags on the global stage in the extent to which its firms are selling and engaging globally. To stay on top of the global game, you need to work together as one region, with one global vision, engaging with other markets around the world. Leveraging and building up the assets of a globally connected economy—cutting edge innovation in manufacturing and services, strong firms and sectors, skilled workers, freight/passenger logistics, immigrant gateways, FDI—can not be the sole responsibility of one jurisdiction or one organization. The export council and export plan is a promising start to working together. So please join these and other regional efforts and commit to their success. Only then will you be able to bring home the fruits of global trade to all firms, workers, and neighborhoods in the L.A. region.

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Editor’s Note: During the opening breakfast event for Los Angeles’ 86th Annual World Trade Week, Amy Liu delivered a presentation and remarks describing how the region can build on its local assets to boost exports.

It is a real honor to be asked to help you kick off your 86th Annual World Trade Week. After 86 years, it is not a surprise that this is a region that is quite globally aware and globally engaged, thanks to the leadership of the L.A. Area Chamber, the L.A. and Long Beach ports, the city, and many, many others.

Recent speakers have come before you reinforcing the importance of the trade economy and the critical need to modernize the trade infrastructure here in the region and the state, building a truly effective freight/logistics and supply chain management system. That is no doubt imperative if we are to keep the L.A. region a trade hub of choice in an increasingly competitive global environment.

"The winners in the next economy will be those who strengthen global assets and tap new sources of aggregate demand."

This morning, I want to build on those messages. First, it is important to recognize that it is metro areas that are the true economic units of the global economy so they must act with intention to maximize the opportunities presented by expanding markets abroad. Yet, to act regionally, we need strong civic infrastructures — of business, political, civic, university, nonprofit leaders who must work effectively together to leverage and integrate all of the assets that will help the L.A. region prosper. The good news is that the new Los Angeles Regional Export Council and its regional export plan embody that kind of proactive, cross-sector partnership that will position this region well for success. And Brookings is pleased to have been advisor of that effort.

It is often said that collaboration is an unnatural act. Yet, those regional export partnerships and initiatives must succeed and not just be plans on paper. There are new rules of economic growth post-recession. To be clear: the regions that adapt well … with focus, intention and collective action … will be those who will excel in the new global economic order.

Times have changed. The U.S. economy is undergoing a major economic restructuring which demands a structural response. The Great Recession was not the same as its predecessors.The job loss this time was steeper, the impact deeper, and the recovery slower because this was a structural recession.

The core structural problem: Nearly all of the incremental job growth over the last two decades came from non-tradable sectors, such as real estate, retail, and government.This was the eye-popping stat issued by Nobel economist Michael Spence. In short, we stopped innovating and producing jobs in value-added industries that create wealth, grow local industries, and make our American marketplace distinct from our competitors.

The other big structural shift: Economic growth is increasingly taking place outside the U.S.

In 2010, the combined global GDP of the BIC nations surpassed that of the U.S. for the first time, making up one-fifth of the world economy. That shift is expected to accelerate in the coming years while the U.S. share of global GDP is forecasted to stay the same.

The rise of the BICs is also in part a reflection of the rise of global metros. Rapid industrialization has been matched by rapid urbanization. More than half of the world’s population now lives in cities, and that share is expected to grow to 60 percent in 2030 and 70 percent by 2050.

With rapid urbanization comes the rise of the global middle class which isdriving the growth of consumption. OECD predicts that, despite the recession, consumption is expected to rise from $21 trillion today to $31 trillion by 2020, mostly due to the growth in Asia and Latin America.

We view these trends as less a threat but a market opportunity.

Against this back drop, let me tell you what the data is telling us. The winners in the next economy will be those who strengthen global assets and tap new sources of aggregate demand.

The leaders in the next economy will innovate in manufacturing.While manufacturing has contracted as a share of the overall economy, it is becoming leaner and more advanced. Thus, manufacturing jobs are recovering faster than the economy as a whole, at 2.3 percent in the third quarter of last year compared to 1.4 percent nationally. The manufacturing sector has added about 350,000 jobs in the last two years.

For those who remain skeptical about U.S. competitive advantage in manufacturing, this is not the industry of yesterday. The U.S. is the third largest manufacturing exporter in the world because manufacturing remains a critical part of our innovation cycle.U.S. manufacturing employs 35 percent of all of our scientists and engineers, invests 68 percent of all R&D; and generates 90 percent of all patents.

Leaders will also need to innovate in services. In fact, services, such as business consulting, education, architecture and planning, are the fastest growing segment of our export economy, and the U.S. has a trade surplus in services.

Within the services sector, expenditures of foreign students in U.S. colleges is growing steadily. We now have more than 720,000 international students studying in the United States, led by those from China, India, and Korea. That sector represents $21.2 billion in U.S. service exports.

Leaders in the next economy will also invent and deploy clean economy goods and services.

Rapid urbanization worldwide has pushed up the global demand for environmentally friendly goods and services, such as energy efficient appliances and building technologies, smart grid, sustainable land use planning and infrastructure, and organic foods. We are meeting that demand. In fact the U.S. has a sizeable clean economy, representing 2.7 million jobs.

The upshot: U.S. clean economy products generated $54 billion in exports, two times more value per job than the typical U.S. export.

Additionally, the regions that prosper will be those that take advantage of global demand. The post-recession reality has made that more urgent.

According to our recent Global MetroMonitor, 90 percent of the fastest growing markets among the 200 largest world cities were located outside of the U.S., Western Europe, and earthquake-ravaged Japan.

In fact, there are more than 20 markets around the globe that did not experience this last recession or have already fully recovered— Shanghai, Shenzhen, Mumbai in Asia ... Istanbul in Europe … Santiago and Buenos Aires in Latin America.

Bottom line: If we are to grow, our firms must look outside of the U.S. and tap emerging markets and global consumption as a source of growth here at home.

And here is the evidence: Those firms who embraced international sales drove our economic recovery. Exports were responsible for 46 percent of US GDP growth between 2010 and 2011 …which is remarkable since exports make up only 13 percent of the GDP of the U.S. … compared to much higher shares in China, Canada, and the entire EU.

Going global pays off for small and mid-sized firms.Those who exported saw their revenues grow, by 37 percent, through 2009, compared to just 7 percent among non-exporters.

Selling globally simply makes good business sense.

Second, it will be metro areas like Los Angeles that will drive the transition to the next economy.

Metro areas are the engines of the global economy b/c they aggregate and integrate the very market assets that drive growth.Even though the 100 largest metro areas sit on just 12 percent of the nation’s land area, they dominate in innovation, by attracting 94 percent of the nation’s venture capital. They are the producers of our trade economy, generating 75 percent of all services exports. And they are the hubs of supply chains and goods movements, handling 82 percent of the nation’s air freight.

As a result of those assets, the 100 largest metro areas generate 75 percent of the nation’s GDP.

And metro areas generate the majority of export activities in 30 out 50 states.

Let’s take a quick aerial trip to this metro area and showcase the unique components of your trade economy, which is truly regional in nature.

You are the largest metro exporter in the country, with $80b in export sales, and exports make up a larger share of this economy at 11 percent than the typical metro area or even the nation as a whole.

Your export economy is more service oriented than the national average … driven by royalties, travel and tourism, and business and professional services.

That’s not surprising. Ask anyone what they think L.A. produces: Hollywood is the first thing that comes to mind. In 2010, royalties were a $12.4 billion export industry, powered by film and television.

Yet L.A. does not just make films, it makes things.Close to 60 percent of your exports comes from the manufacturing sector, and you have over 106,000 direct export manufacturing jobs.

In Torrance, southwest of downtown, we find Luminit,a small manufacturer of advanced lighting products that are used in a broad range of applications. Luminit’s production center houses some of the world’s most advanced equipment for R&D, engineering, and the manufacturing of optics. In the last two years, the firm’s exports have grown 68 percent.

Just to the south of Luminit is Pelican Products, a firm that produces high-performance protective cases and advanced portable lighting equipment used by law enforcement, defense, aerospace, and the entertainment industry. Exports make up 35 percent of Pelican’s total business, and the firm sells its products to over 100 countries. As with Luminit, Pelican has experienced significant export growth in the past few years, driven by strong demand in Europe and Asia.

Both Pelican and Luminit benefit from their partnership with USC’s Center for International Business Education and Research and UCLA. One works with CIBER to help determine where to locate distribution centers in Asia. And the other benefits from the Export Champions program, a collaboration also with the L.A. Area Chamber of Commerce, which deploys MBA students to small firms to help them integrate international sales and markets into their business plans.

Further, these universities are service exporters themselves, attracting nearly 39,000 international students who purchase their top notch educational programs.

USC and UCLA are joined by Mayor Antonio Villaraigosa at City Hall, the L.A. Area Chamber of Commerce, and others, such as the Ports of L.A. and Port of Long Beach, the Los Angeles World Airports and regional business associations in being part of a larger regional group—the Los Angeles Regional Export Council which was formed last November to bring greater coherence and focus in helping L.A. firms expand effectively in to global markets.

Finally, as you know well, the ports of Los Angeles and Long Beach play particularly critical roles in the movement of goods produced by firms like Pelican and Luminit to markets throughout the world, especially to Asia. Taken together, these two ports form the busiest complex in the Western Hemisphere, and the sixth busiest port complex in the world.

The L.A. story reveals why it is not just the city but the entire metro area that powers our economy: these hyper-linked networks of private firms, universities and public and nonprofit institutions rely on each other to fertilize ideas, extend innovation, enhance competitiveness, and collaborate to catalyze economic growth for the entire region. These actors also make up the civic infrastructure needed to make sure the economy doesn’t just grow by luck but with purpose and vision.

That leads me to my final point, given all these assets, this region is poised to lead in the global economy.

First, you are innovating locally. And you must not only because of increased competition abroad but because partisan gridlock in Washington and the fiscal straightjacket in Sacramento demand that you drive your own fortunes in this global economy.

This region is one of four metro areas in the country piloting some of the nation’s first metro export plans. Your leadership in this space, alongside Portland, Minneapolis-St. Paul and Central New York, will likely spawn copycatting among state, city, and regional leaders who are eager to better orient their economies for export growth. Further, this state, and federal trade-related agencies, like ITA, SBA, Ex-Im Bank, are all committed to better align their state and federal activities with this region’s ambitions.

To develop its plan, this region conducted a market assessment of its export position, using data analysis and surveys and interviews of companies.

Leaders here worked hard to set exporting goals and objectives, devise strategies to meet those goals, and establish metrics to gauge progress.

And lastly and noted before, this plan was prepared by a consortium of corporate, government, university and civic institutions who “collaborated to compete” globally.

What I like about these plans is that it exemplifies exactly why you can not double exports nationally from the top but instead from the bottom up. The L.A. region and each of the other metros set a goal of doubling exports in five years. But each is meeting that goal with very different strategies, built on their unique competitive advantages. There is no one size fits all approach to doubling exports.

This region has established a Los Angeles Regional Export Council. The council, to be formal and funded, will be held accountable for ensuring that existing efforts and new programs are coordinated, unified, and sustained in ways that will increase the number and volume of exporters in this region.

The focus will be helping export ready companies in 12 target industries, like aerospace and energy/green technologies, connect to priority markets like the Pacific Rim.

In short, this proactive effort to bring more companies into the trade economy is good for all parts of greater L.A., such as for both ports and area airports, so they are shipping not just any goods but more products made in L.A.

To take this metro innovation to scale, Mayor Villaraigosa, in his capacity as head of the U.S. Conference of Mayors,put out an Export Challenge to America’s cities and metros: “Design strategies that build from your special export strengths.”

Soon, other metro areas will be joining you in developing innovative approaches to trade.

But, as you know, as much as you innovate locally, the states and federal leaders matter to the success of your efforts. So, you must advocate nationally.

Local leaders in China, Germany, South Korea, Spain, Brazil, and Columbia are working in partnership with their regional and national governments to make transformative investments in world class ports, high speed rail, research and innovation.

We must do the same here at home.

So what does this region want in a state and federal partnership to make a regional export and trade strategy a success?

First, at the state level, it has been helpful to have a state partner in the governor’s new Office of Business and Economic Development. The governor announced the opening of a new California-China Trade and Investment Office, while in L.A. during the Chinese vice president’s visit earlier this year.

That global presence is critical. But the state can do more at a time when other states are aggressively ramping up their state export capacity. It can re-establish the California Export Finance Office to provide small exporting firms with short-term financing, a self-generating program with little cost to tax payers. It should commit long term funding to the critical CITD program, the Centers of International Trade and Development,which trains firms on exporting but currently on a financial lifeline. Or it can establish a competitive grant program for metro area, as done in other states, so regions like L.A. can implement their own trade strategies

At the federal level, one of the few bipartisan successes was the passage of the free trade agreements. Hopefully, for the remainder of the year, we will also pass the reauthorization of the Ex-Im Bank, and maybe a short term national transportation bill.

But when this election is over, this region should demand real action:

No matter who is president, there is a good chance that the federal government will streamline and reorganize federal trade agencies and services. And the business community is demanding it. Metros also need to play an enormous role.

President Obama, for example, has proposed consolidating six agencies in this federal apparatus involved in trade activities: the U.S. Department of Commerce’s core business and trade functions, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, and the Overseas Private Investment Corporation.

Yet consolidation would be a failure if it just moved agency boxes around in Washington D.C.

The key to success is to integrate activities on the ground. As I have heard Carlos urge often… local representatives of the federal export agencies must operate as a unified export team themselves– with one set of export objectives, one set of performance metrics, in alignment with a region’s ambitions and puts businesses first.

Finally, beyond innovating locally and advocating nationally, U.S. metros must network globally—creating and stewarding close working relationships with trading partners in both mature and rising nations.

Strong connections already exist:

Metros with concentrations in financial services, like New York, are forming tight, interlocking networks with similarly focused metros around the world.

Metros with concentrations in advanced manufacturing, like Detroit, are similarly linking with metros in both developed and rising nations.

And port metros like Los Angeles-Long Beach are making key connections with the world’s air, rail and sea hubs.

These networks obviously start with firms and ports that do business with each other.

But, over time, they must extend to supporting institutions— governments, universities, regional business groups—that provide support for companies at the leading edge of metropolitan economies.

The goal is to revive the way the global economy evolved before the rise of nation states when historical trade routes flowed through cities … like the 15th century Silk Road that connected Asian cities and silk, tea, spices, they produced to cities in Europe, Mediterranean and Africa.

* * *

In closing, I want to urge you to not rest on your rankings. You may be the largest exporter in the U.S., and the busiest port hub in the U.S., but the L.A. economy lags on the global stage in the extent to which its firms are selling and engaging globally. To stay on top of the global game, you need to work together as one region, with one global vision, engaging with other markets around the world. Leveraging and building up the assets of a globally connected economy—cutting edge innovation in manufacturing and services, strong firms and sectors, skilled workers, freight/passenger logistics, immigrant gateways, FDI—can not be the sole responsibility of one jurisdiction or one organization. The export council and export plan is a promising start to working together. So please join these and other regional efforts and commit to their success. Only then will you be able to bring home the fruits of global trade to all firms, workers, and neighborhoods in the L.A. region.